U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
X ANNUAL REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended April 30, 1999.
_ TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from ________to_______
Commission file number 1-111898
JETFORM CORPORATION
(Exact name of Registrant as specified in its Charter)
Canada N/A
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
560 Rochester Street
Ottawa, ON K1S 5K2, Canada
(Address of principal executive offices)
Issuer's telephone number including area code: 613-230-3676
Securities registered under Section 12(b) of the Exchange Act:
Name of each exchange
Title of each class on which registered
Common shares, without par value Pacific Stock Exchange
Securities registered under Section 12(g) of the Exchange Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
The aggregate market value of the voting and non voting stock held by
non-affiliates of the registrant computed by reference to the last price at
which the stock was sold as reported on the NASDAQ Stock Market on July 20, 1999
was US$46,631,439. For the purpose of determining this amount, voting stock held
by officers, directors and stockholders whose ownership exceeds five percent are
excluded. This determination of affiliate status is provided for purposes of
this report and does not represent an admission by either the registrant or any
such person as to the status of such person.
State the number of the issuer's Common Shares outstanding on July 20, 1999;
19,442,201
DOCUMENTS INCORPORATED BY REFERENCE
NONE
<PAGE>
JETFORM CORPORATION
TABLE OF CONTENTS
PAGE
PART I
ITEM 1 BUSINESS...............................................................4
ITEM 2 PROPERTIES............................................................15
ITEM 3 LEGAL PROCEEDINGS.....................................................15
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...................15
PART II
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS...............................................................16
ITEM 6 SELECTED FINANCIAL DATA...............................................18
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.................................................19
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS............30
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...........................31
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE..............................................55
PART III
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT....................56
ITEM 11 EXECUTIVE COMPENSATION................................................59
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.......65
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................67
PART IV
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K......69
SIGNATURES....................................................................74
<PAGE>
This Annual Report on Form 10-K ("Report"), contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933.
Discussions containing such forward-looking statements may be found in Items 1,
and 7 hereof, as well as within this Report generally. In addition, when used in
this Report, the words "believes", "intends", "anticipates", "expects", and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to a number of risks and uncertainties. Actual results in
the future could differ materially from those described in the forward-looking
statements as a result of changes in technology, changes in industry standards,
new product introduction by competitors, increased participation in the
enterprise software market by major corporations and other matters set forth in
this Report. The Company does not undertake any obligation to publicly release
the results of any revisions to these forward-looking statements that may be
made to reflect any future events or circumstances.
<PAGE>
PART I
Item 1. BUSINESS
THE COMPANY
JetForm Corporation (which, together with its subsidiaries is referred to
herein as "JetForm" or the "Company") was incorporated as Jorag Computer Systems
Ltd. pursuant to the Canada Business Corporations Act on June 10, 1982. By
Articles of Amendment dated September 28, 1982, the Company changed its name to
Indigo Software Ltd. By Articles of Amendment dated September 30, 1991, the
Company changed its name to JetForm Corporation. The Company's registered head
and principal office is located at 560 Rochester Street, Ottawa, Ontario, K1S
5K2.
The following chart sets forth certain information concerning the principal
subsidiaries of the Company as at April 30, 1999:
Why Interactive Inc.
(Ontario, Canada)
JetForm Corporation
(Delaware, U.S.A.)
JetForm U.K. Limited
(England & Wales)
JetForm France SA
JetForm Corporation 100% (France)
(Canada)
JetForm Pacific Pty Ltd.
(Australia)
JetForm Scandinavia AB
(Sweden)
JetForm Deutschland GmbH
(Germany)
JetForm Technologies Limited
(Ireland)
JetForm Japan K.K.
(Japan)
JetForm PTE LTD
(Singapore)
Overview
JetForm Corporation develops software solutions that automate business
processes, transforming them into e-processes. JetForm solutions enable
companies and government to lower operating costs, increase revenues and reduce
cycle times. The Company's core strengths are in intelligent XML forms, process
automation and customer-focused document output.
Management believes the Company is well-positioned for the broad acceptance
of its e-process solutions worldwide. JetForm's sales force and service
professionals, who operate in 11 countries, focus on sales and services to end
users and support the Company's numerous third-party marketing and sales
relationships. JetForm's third-party resellers, value-added resellers ("VARs"),
system integrators and distributors further leverage the Company's global reach.
JetForm has also established key strategic alliances and original equipment
manufacturer ("OEM") relationships with, among others, Microsoft,
Hewlett-Packard, IBM, PeopleSoft, SAP, and Xerox, to broaden market acceptance
for its solutions. JetForm customers include Auction Universe, the Australian
Department of Defence, Bank of America, BankBoston, Chase Manhattan, Cigna,
DaimlerChrysler, Hydro Quebec, Kodak, Microsoft, Minnesota Mining and
Manufacturing Co., New Brunswick Department of Supply and Services, PaineWebber,
Prudential Real Estate and Relocation Services, Siemens Nixdorf
Informationssysteme, U.S. Department of Defense, Volvo and Wells Fargo.
Industry Background
The Internet is transforming business operations. For years, the Internet
and the world wide web ("the Web") were fundamentally uni-directional vehicles
for delivering information to customers and partners. Now, organizations are
embracing the Web in order to conduct business with their customers and
partners.
Web-based business processes - or "e-processes" - now extend beyond the
enterprise to include customers, partners and employees. Compared to the world
of paper processes, e-process is raising these customers' expectations for
faster completion of service requests and up-to-the-minute status checking.
Customers now expect access to services seven days a week, 24 hours a day and a
sense of personal involvement in business processes.
For organizations, e-process means not only a chance to dramatically lower
costs, but to differentiate themselves through superior customer service.
Organizations can reduce costs by replacing paper-driven labor-intensive process
flows with highly automated ones and improve customer service by dramatically
speeding up the time to complete a service request, integrating a variety of
information sources and automating work tracking and notification functions.
The JetForm Solution
JetForm is a leader in helping companies transform inefficient paper-based
business processes into automated e-processes and JetForm leads the global
electronic forms market, with an estimated 80% market share. JetForm is also a
global leader in enterprise workflow - the engine for automating e-processes.
The Company's print and output solutions provide companies a flexible, fast,
easy and cost-effective way to generate professional-quality document output
from core business applications.
These products are complemented by JetForm's comprehensive services team
which facilitates product implementation and provides ongoing training and
support. The cornerstones of the JetForm solution are as follows:
o E-process Framework. JetForm's e-process framework allows organizations and
integrators to create applications that automate their customer-facing,
partner-facing and employee-facing processes. The reusable framework
incorporates JetForm's e-form, workflow and output engines, along with a
complete methodology into a comprehensive environment for rapid application
development and deployment. It gives customers, partners, and OEMs JetForm
tools to build e-process applications to address many different types of
processes and problems.
At the core of JetForm's e-process framework is a comprehensive open
standard for e-processes, XFA or XML Forms Architecture. Developed by JetForm,
XFA embraces all aspects of e-process -- the capture, presentation, routing,
processing and outputting of e-forms-based information.
By providing a consistent, platform-independent method of defining
forms-based information, XFA insulates customers from changes to technology,
applications and technology standards. It also enables critical flexibility.
XFA-defined applications allow customers to generate multiple versions of a form
from a single design on paper and electronically.
o E-process Applications. JetForm is developing a series of e-process
applications -- configurable and customizable business solutions that
leverage the Internet and automate customer-facing, partner-facing and
employee-facing business processes.
E-process applications will most often be compared with two other types:
applications built with tools and custom development, and packaged
single-purpose applications. Time pressures are encouraging organizations to
give up the approach of custom building applications in favor of ready-built
applications. Single-purpose packaged applications, while popular, are limiting
in many respects and may have little interoperability with other applications.
The Company believes that increasing numbers of customers will choose to
leverage the full capabilities of integrated e-process applications, either by
purchasing packaged end-to-end solutions from JetForm or a JetForm solutions
partner, or by licensing JetForm's technology and applications framework and
building multiple custom solutions in-house.
Examples of customers who are using JetForm's e-process solution to
transform paper-based processes to digital processes include:
o Auction Universe. Auction Universe, an online marketplace where classified
advertising and sales merge with the auction process to create a dynamic
e-commerce community, has implemented JetForm's e-process solution to
automate their customer service operations. Over 200 customer requests
regarding commission adjustments, bid cancellations, Web site issues and
general questions were logged daily by Auction Universe's customer service
department. Requests came in via the Web, e-mail and telephone. Using
JetForm e-process technology, Auction Universe now captures and resolves
all customer requests in a single electronic form - whether received via
the Web, e-mail or phone. JetForm's use of well-known products allowed for
seamless integration with Auction Universe's information technology
infrastructure, including Microsoft Exchange, SQL Server and Windows NT. As
a result, the Company believes Auction Universe has increased customer
loyalty and customer satisfaction on the Web and produced a 50-70%
reduction in response time.
o The Chinese Service Center for Scholarly Exchange (CSCSE). CSCSE is
affiliated with the Ministry of Education, People's Republic of China, and
provides services to assist scholarly exchanges between China and other
parts of the world. Using JetForm's e-process solution, Dawning Information
Corporation, a major systems integrator in China, in partnership with
JetForm's Beijing office, developed the Online Visa Application System
(OVSAS). OVSAS automated the CSCSE's Internet-based forms filling,
processing and verification procedures and enabled them to generate a
high-quality visa application form for each embassy. The Chinese government
expects to save the equivalent of US$2 million annually by deploying the
JetForm e-process solution at CSCSE. The student visa application system
increases the efficiency of the application and approval process, leading
to faster turnarounds and easily accessible, more accurate data. Students
can now apply for their visas using the Web at universities or local CSCSE
offices, rather than travel across country to Beijing.
o Prudential Real Estate and Relocation Services. Prudential Real Estate and
Relocation Services ("PRERS")is a leading provider of domestic and
international relocation services and a subsidiary of the Prudential
Insurance Company of America. Following an e-business strategy, PRERS
identified two urgent systems requirements. The first was to develop an
integrated, Internet-driven platform for processing relocation services.
The second was to replace a slow, paper-based, non Y2K compliant document
production system. PRERS used the JetForm e-process workflow engine,
InTempo, as well as FormFlow 99, to develop the EquiClose application - an
extranet that lets relocation specialists, suppliers and title companies
complete e-forms, monitor workflow progress and download related
information. DocProd is the PRERS Web-enabled document production system.
Information captured in EquiClose feeds DocProd and both are linked by a
common service delivery database. Using JetForm e-process forms and output
engines, DocProd improves document communications with customers, clients
and suppliers by providing accurate content through integration with core
operational systems. Each transferring employee receives a personalized
package of documents and forms with clear directions on content and actions
required. Using JetForm Web-based e-process technology for data capture,
workflow and output management is expected to enabled PRERS to grow revenue
and extend their systems to improve service delivery and responsiveness to
their corporate clients, their clients' customers, suppliers and their own
employees.
Corporate Strategy
JetForm's strategic vision is to be the global industry standard in
e-process solutions. The Company plans to achieve this vision through the
following strategies:
o Maximize Customer Flexibility. JetForm has adopted a solution-selling model
which is intended to allow JetForm and its solutions partners to sell more
deeply into organizations by offering e-process solutions for most
functional department. Solution selling also gives JetForm customers great
flexibility. They can begin by purchasing one or more limited-license
packaged or custom solutions from JetForm or a JetForm partner. Once they
have invested in several e-process solutions, they can choose to leverage
this investment by purchasing a full license for JetForm technology and the
JetForm e-process application framework. The framework's focus on component
re-usability will allow customers to quickly and cost-effectively build and
deploy their own custom applications on a consistent, integrated e-process
platform.
o Leverage Distribution Channels and Third-Party Alliances. JetForm's
objective is to achieve broader market penetration by employing a
multi-channel strategy with a particular emphasis on third parties. Through
its sales team, the Company focuses on Fortune 500 accounts and particular
vertical segments, including the financial services, manufacturing and
healthcare industries as well as the government sector and government
agencies. The Company also provides support and sales assistance to
resellers, VARs, system integrators and international distributors to
leverage its distribution capabilities. The Company is developing and
maintaining key strategic alliances and OEM relationships in order to
broaden market acceptance. Alliances currently established include those
with Hewlett-Packard, IBM, Microsoft, PeopleSoft, SAP, and Xerox.
o Expand Customer Base. The Company intends to aggressively expand its
customer base worldwide and in particular vertical markets. The Company is
pursuing this opportunity through its sales force and service professionals
which are located in 8 countries and the availability of its products in
nine languages. While the Company has had a particular focus on financial
services, the Company is broadening its focus on particular vertical
markets including manufacturing, government, law enforcement, healthcare
and technology.
o Maintain Technological Leadership. The Company strives to maintain
technological leadership by continually improving the functionality,
performance, reliability and compatibility of its products. The Company
believes that its success to date has resulted largely from technological
innovation and leadership in the e-forms and workflow market. The Company's
technological capabilities are a key factor in the Company's ability to
work with strategic alliance partners to efficiently and effectively
integrate their technologies in order to provide an integrated solution for
its customers and its alliance partners' customers.
Products
The Company offers scaleable, e-forms, workflow and output solutions for
enterprises to automate business proceses. The JetForm solution is comprised of
a combination of software products and associated implementation and support
services. The Company's product line has been designed and developed with a
modular, open-systems architecture and supports most industry standard
interfaces to e-mail, groupware, internet/intranet and business application
software. The Company's products are sold individually or in combination. The
actual price to an end user or reseller can vary substantially from customer to
customer depending on location, the number of licensed users and combination of
products and services to be provided.
Design
FormFlow 99 Form Designer, JetForm Design, and FormFlow Designer, allow
users to design e-forms. FormFlow 99 Form Designer is the tool used to design
the electronic forms for use with all other JetForm products, and runs on
Microsoft Windows 95, Windows 98 and Windows NT and provides a "what you see is
what you get" (WYSIWYG) interactive graphical user interface to allow e-forms
designers to create or modify JetForm e-forms.
JetForm Design allows developers to design the two major components found
in every form: the template-- lines, boxes, shaded areas, logos, text blocks,
headings, labels, etc. -- and the fields or locations where the variable
information is filled in on the form. JetForm Design also allows the user to
develop dynamic subforms which generate intelligent form presentation based on
the data provided to populate the form. When the design of the form is
completed, the form is compiled to create a specially encrypted run-time version
of the form for use with JetForm Filler Pro, JetForm Central and JetForm Central
Pro which run on most commonly used platforms and operating systems. Foreign
language versions of JetForm Design are currently available in French, Swedish,
German, Traditional Chinese and Japanese. The "suggested corporate price" (the
"SCP") for a single user copy of JetForm Design is US$1,495.
Through its acquisition of the Delrina Assets, JetForm also offers FormFlow
Designer, which contains similar capability to JetForm Design. FormFlow Designer
allows developers to create custom forms, menus, macros and applications quickly
and easily, while also offering a Visual Basic-like scripting language for
embedded logic. FormFlow Designer offers enhanced client-based workflow routing
and tracking capabilities so organizations can automate enterprise-wide business
processes. FormFlow Designer runs on Microsoft Windows 3.1 and Windows 95. The
latest version of FormFlow -- FormFlow 99 -- allows for the creation of forms
specifically for deployment to the Web. It permits designers to create rich
forms that can be easily deployed into an Intranet or Internet environment. The
SCP for a single user copy of FormFlow Designer is US$1,495.
Filler
JetForm Filler Pro and FormFlow Filler allow the user to view and input
data into e-forms created by JetForm Design and FormFlow Designer, respectively.
The e-form is displayed on screen, ready for the user to enter data into the
data entry fields. As data is entered, it is validated to ensure that any rules
included in the form design are satisfied. Some fields are automatically filled
based on the calculation rules defined by the form designer, including relevant
database lookups.
Once completed, an e-form can be printed, saved to disk or sent via e-mail
to the next designated recipient. JetForm Filler Pro and FormFlow Filler can
send and receive e-mail messages to and from the majority of commonly used
e-mail packages, including Microsoft Mail, Microsoft Exchange, Lotus cc:Mail,
Lotus Notes Mail, Banyan Vines, CES Quick Mail, Novell Groupwise and ICL
Teamware.
Versions of JetForm Filler Pro are available for common client computer
platforms and operating systems, including Microsoft Windows 3.1, Windows 95 and
Windows NT. Versions of FormFlow Filler are available for Windows 3.1 and
Windows 95. Foreign language versions of JetForm Filler are available in Danish,
French, Finnish, German, Portuguese, Swedish and Norwegian. FormFlow Filler is
available in English, French and German. The SCP for a single user license of
JetForm Filler Pro is US$79 and the SCP for a single user copy of JetForm
FormFlow Filler is US$79.
InTempo
InTempo was first shipped as JetForm Workflow in July 1996 and as InTempo
in January 1998.
InTempo is a server-based workflow engine suited to rapidly and securely
automating a wide range of business e-processes across the Internet, extranets
and intranets. InTempo allows organizations to leverage business investments in
legacy systems, ERP, RDBMS and third party applications, by connecting their
processes with their Web infrastructure and back office.
With InTempo, simple and complex processes can be created. InTempo's
graphical design tool enables business process owners to build workflows as a
series of tasks drawn together like a flow chart. InTempo is integrated with
HTML forms, as well as JetForm's e-forms products, which provide intelligent,
feature-rich, secure applications. Scripts, workflow definitions, role
definitions can all be re-used, making it fast to automate additional processes.
Processes can be changed in response to dynamic business conditions. InTempo can
produce high fidelity, customer-focused output such as invoices, records and
statements, at any step in a process.
Integration with Microsoft Management Console facilitates administration of
InTempo. InTempo has a comprehensive security model - including user
authentication, process permissions, electronic signatures, S/HTTP, role
security and policy enforcement - making it a secure choice for automating
processes that include customers, partners, suppliers and employees.
InTempo provides the application richness needed by sophisticated users and
the intuitiveness required by casual users. It has a browser-based work list,
shared work queues, e-mail notifications and reminders, basic and advanced
tracking capabilities, a drag-and-drop document envelope, and on-line help. The
InTempo product includes advanced computer-based training to ensure end users
work more effectively, sooner, and with less support. The SCP for InTempo is
US$200 per copy with a minimum purchase of US$10,000 for 50 users.
JetForm Central
JetForm Central (previously called JetForm Server) is a client/server
software solution that provides connectivity to line of business software
applications for producing e-forms output to laser printers or fax servers.
JetForm provides comprehensive support for "dynamic" forms and data
transformation. Dynamic forms provide the capability to change the format of the
printed output based on the data to be printed which is not possible with
pre-printed forms. The data transformation capability provides enhanced
flexibility for integration with business applications while minimizing the need
for programming changes.
JetForm Central can output documents in 18 different languages and is
currently available for Microsoft Windows 3.1, Windows 95, Windows NT, OS/2,
AS/400, DEC VMS, DEC Unix and Alpha NT, HP3000, HPUX, Sun Solaris, SCO Unix, IBM
AIX, and several other Unix systems. The SCP for JetForm Central ranges from
US$3,895 to US$19,995, depending on the computer platform and operating system.
JetForm Central Pro
While JetForm Central Pro offers the same capability as JetForm Central, it
also provides Open Database Connectivity to existing databases and supports
alternate output methods in addition to laser printed forms and faxing.
Currently, JetForm Central Pro can support output to e-mail, PDF, automatic SQL
database updates (and other field data calculations), initiation of JetForm
workflow processes and automatic receipt of Web page forms. The SCP for JetForm
Central Pro is US$11,995.
JetForm Output Pak for SAP R/3
JetForm Output Pak for SAP R/3 expands the scope of R/3 applications by
allowing customers to create and integrate electronic forms with their R/3
business processes. With an SAP-certified interface, it provides a flexible and
cost-effective way to create and maintain forms specifically for the SAP R/3
environment. The SCP for JetForm Output Pak for SAP R/3 starts at US$40,000,
depending on number of R/3 users licensed.
JetForm Output Pak for Oracle Applications
JetForm Output Pak for Oracle Applications expands the scope of Oracle
Applications by allowing customers to create and integrate electronic forms with
their Oracle business processes. With an Oracle-certified interface, it provides
a flexible and cost-effective way to create and maintain forms specifically for
the Oracle environment. It provides professional-looking output, readability for
users, and a better corporate image for the organization. The SCP for JetForm
Output Pak for Oracle Applications is US$35,000.
JetForm Forms Pak for PeopleSoft Student Administration
JetForm Forms Pak for PeopleSoft Student Administration allows the higher
education community using PeopleSoft Student Administration applications to
output line-of-business documents such as US Federal Government-compliant loan
forms, student invoices and financial award notices. The SCP for JetForm Forms
Pak for PeopleSoft Student Administration is US$15,000.
Services
As at April 30, 1999, the Company had a team of 168 professionals who are
responsible for consulting, custom software development, forms design and
technical support. Consulting services include assisting customers to configure,
implement and integrate the Company's products and, when required, customize
products and design automated processes to meet customers' specific business
needs. In addition, the Company offers e-forms design services. This broad range
of services provides customers with the ability to streamline business
processes.
The Company also provides customers with ongoing technical support by way
of telephone, fax and Web access. The technical support team works closely with
customers to diagnose problems and address system integration issues to ensure
the customer receives the full benefit of the JetForm solution. The Company
maintains support facilities which permit real-time testing and replication of
customer problems. In February 1998, the Company incorporated JetForm
Technologies Limited, a center for professional services and technical support
in Dublin, Ireland to support its European customer base. The Company's software
products are typically sold with annual maintenance and support contracts. The
annual service fee is generally 15-18% of the corporate price of the software
purchased and entitles the customer to remote support, product upgrades and
maintenance releases.
Sales, Marketing and Distribution
The Company's sales strategy is to achieve broad market penetration
worldwide by employing a sales force focused on sales to end users, resellers,
VARs, systems integrators and international distributors. The sales force also
supports the Company's strategic alliances and OEMs. The Company's marketing
programs support the various focuses of the sales force and include market
research and industry analyst relations; targeted print, web and direct mail
advertising; public relations activities, lead-generating events, seminars and
conferences; web, multi-media and printed marketing collateral; and
field-focused education and communication.
The Company utilizes the following distribution channels:
o Sales Force. The Company's sales force operates from a total of 14 offices,
with six in the United States near the following centers: Atlanta; Chicago;
Dallas; New York; San Francisco; and Washington, two in Canada and Sweden
one in each of the United Kingdom, China, France, Germany, and Japan. The
Company's sales personnel primarily target Fortune 500 companies, with a
particular focus on the financial services industry (banking, insurance and
brokerage), manufacturing and the government sector.
o Resellers, VARs, System Integrators and International Distributors. The
Company considers four sales channels -- resellers, VARs, system
integrators and international distributors -- integral to its sales and
marketing effort. The Company's sales, marketing and technical support
staff support these channels through education, training, customer
assistance and marketing. In addition, the Company has agreements in place
with local distributors in the following countries: the Czech Republic,
Denmark, Finland, Greece, Hong Kong, India, Italy, Norway, Spain and South
Africa.
The JetForm Partner Program
The JetForm Partner Program is designed to support JetForm in its mission
to deliver the most comprehensive products and solutions that meet the needs of
its customers. By developing partnerships with organizations that provide
complementary products and services JetForm is able to offer its customers
comprehensive solutions. The Partner Program allows JetForm to enter markets it
would otherwise be unable to enter in the short term by partnering with the key
players in a targeted market to deliver JetForm products or solutions built with
JetForm Products. The JetForm Partner Program consists of the following types of
partners: Strategic Alliances and Independent Software Vendors ("ISV"); VARs;
System Integrators; Distributors; and OEMs.
Strategic Alliances and ISV Partners
JetForm has a number of strategic partners:
o Strategic Alliances and OEMs. The Company's strategic alliances and OEM
relationships provide JetForm a platform to access the customer bases of
its partners. The Company's alliance strategy focuses specifically on
building partnerships with companies whose own products and technologies
are enhanced or complemented by e-forms, output, and workflow capabilities.
The Company's alliance partners include printer, system integrator,
groupware and applications software, document management, Internet and
electronic commerce companies. These alliances facilitate access to
additional markets and further the Company's third party distribution
strategy.
Nine of the Company's alliances are described below:
Hewlett-Packard: JetForm is a Premier Partner of Hewlett-Packard ("HP").
The relationship with HP is executed at a number of different levels within the
HP organization: the corporate relationship is intended to support inter-company
activities such as mutual support of events including Users Group conferences,
and seminars.
IBM: In December 1996, JetForm and Footprint Software Inc.("IBM
Footprint"), a wholly owned subsidiary of IBM Canada Ltd., entered into an OEM
license agreement whereby IBM Footprint embeds JetForm Central within its Visual
Banker application to offer output management of forms-based information. Visual
Banker is a retail branch automation software application which supports the
sales and services functions of a financial institution. Through the integration
of JetForm Central and Visual Banker, users now have greater flexibility for
output management. The integrated product is marketed and supported by IBM on a
worldwide basis.
Microsoft: JetForm is a strategic partner with Microsoft Corporation,
participating in development activities, marketing programs, customer events and
cooperative sales activities sponsored by Microsoft. JetForm is a member of the
Microsoft Integrated Software Vendor (ISV) program for Document Management and
Workflow. JetForm participates in the ISV programs for Windows NT, Exchange, and
Windows CE, allowing early access and input to the various Microsoft product
development groups. JetForm is also an Alliance Sponsor of Microsoft's Certified
Solution Provider Program, sharing the Company's complementary development tools
with the Microsoft Solution Providers and hosting joint marketing campaigns and
educational events.
PeopleSoft: JetForm is a Software Alliance Partner of the PeopleSoft Global
Alliance Program. JetForm and PeopleSoft have teamed to create an integrated
solution -- JetForm Forms Pak for PeopleSoft Student Administration and Grants
- -- providing PeopleSoft Student Administration and Grants customers with a
flexible, fast, easy way to generate forms and other documents. In addition,
JetForm e-process applications offer casual users a simple, flexible, intuitive
way to access PeopleSoft applications, such as the Human Resources module, using
the familiar interface of an electronic form. As a PeopleSoft Global Alliance
Partner, JetForm has the opportunity to participate in PeopleSoft marketing
activities and has access to the PeopleSoft field sales organization.
Oracle: JetForm is a member of the Oracle Partner Program and is a
Cooperative Applications Initiative ("CAI") approved partner. CAI is a
certification program for products developed to integrate with the Oracle
Applications product suite. The JetForm Output Pak for Oracle Applications
offers an easy and inexpensive way for Oracle Applications customers to create
and output high-quality customer-focused documents (invoices, purchase orders,
order confirmations, etc.) with virtually any laser printer.
SAP: JetForm is a Complementary Solution Provider (CSP) as well as being
BAPI certified for SAP solutions. Many SAP customers insist on this level of
certification prior to buying a solution for a supplier. In the SAP environment,
JetForm sells a vertical packaging of products and services called the Output
Pak for SAP R/3. This product consists of JetForm output technology and is used
on the back end of an SAP system to print documents.
J.D. Edwards World Solutions Company: JetForm is a J.D. Edwards Product
Alliances Partner. This program is open to organizations that are developing
complementary applications that add value and integrate with J.D. Edwards World
and OneWorld applications. The JetForm Print Solution for J.D. Edwards offers
J.D. Edwards customers an easy and inexpensive way to create and output
high-quality customer-focused documents. As a Product Alliances Partner, JetForm
participates in a number of J.D. Edwards marketing initiatives.
Xerox: JetForm has a number of agreements with Xerox Corporation. Currently
in place are: a Cooperative Development Agreement; a Cooperative Marketing
Agreement in the USA; a Cooperative Marketing Agreement in Canada; and a
Reseller Agreement in Europe. Under the Cooperative Development Agreement,
JetForm and Xerox work together to ensure that their technologies are
compatible. JetForm is permitted to use Xerox's "Open Document Services"
certification logo on products certified under this agreement. Under the
Cooperative Marketing Agreements, JetForm and Xerox have agreed to work together
to market and sell the Company's products and solutions. Under the Reseller
Agreement in Europe, Xerox has agreed to resell JetForm products.
The corporate relationship is intended to foster and support inter-company
initiatives, while the field relationship is focused on developing and
supporting revenue generating activities. In North America, most of the
marketing activities are focused on selling into the ERP marketplace, although
there have been non-ERP sales particularly in state and local government.
Entrust Technologies Inc.: JetForm is a strategic partner with Entrust
Technologies and is a member of the Entrust Partner Program. This alliance
incorporates a wide range of marketing, development and cooperative selling
activities. FormFlow 99 carries the Entrust-Ready Gold designation indicating it
has achieved the highest level of integration testing with other Entrust
applications, ensuring interoperability and a feature rich product. FormFlow 2.2
and JetForm Filler Pro 5.2 carry the Entrust Ready designation meaning that they
integrate with an Entrust public key infrastructure.
Customers
The Company's customers include a wide variety of organizations with an
emphasis on the financial services industry and the government sectors, both of
which use forms intensively in their day-to-day operations. No customer
accounted for more than 10% of the Company's total revenues for the year ended
April 30, 1999.
The Company has an international customer base with customers outside of
North America representing 31% of revenues for the year ended April 30, 1999,
and 27% and 29% of revenues for the years ended April 30, 1998, and April 30,
1997, respectively. A selected list of users of JetForm's e-forms, workflow and
output products is set forth below in the following table:
North America International
Financial Services: Bank of America Australia and New Zealand
BankBoston Banking Group Limited
Bank of Montreal Commonwealth Bank of
Chase Manhattan Australia
CIGNA Corp. Dresdner Bank
PaineWebber Incorporated Lloyds Bank
Wells Fargo National Australia Bank
CUNA Mutual Limited
USERS Incorporated Union Bank of Switzerland
Prudential Real Estate
and Relocation Services
Government: Hydro-Quebec Australian Department of
Industry Canada Defence
New Brunswick Dept. of Frankfurt Airport
Supply & Services Authority
U.S. Department of the Swedish Car Test
Air Force Swedish Health Organization
U.S. Department of Defense Chinese Service Center for
U.S. Postal Service Scholarly Exchange
U.S. Department of the
Treasury
Law Enforcement: Justice Canada Berlin City Police
Metro Toronto Police Defence Centre Canberra
Ontario Provincial Police (Australian Department of
Royal Canadian Mounted Defence)
Police Finnish Police
Swedish Police
Technology: Hewlett-Packard Company Siemens Nixdorf
Microsoft Corporation Informationssysteme AG
Symantec Corporation
Other: Bombardier Inc. Asea Brown Boveri
Chrysler Corporation DaimlerChrysler
Minnesota Mining and Ford Motor Company
Manufacturing Co Schindler Corp.
Owens Corning Volvo AB
Procter & Gamble Company
Auction Universe
Product Development
The Company devotes significant resources to research and development
activities focused primarily on e-forms, workflow, output and related
technologies. As of April 30, 1999, the Company employed 173 full time employees
in its research and development group. The Company's research and development
professionals are engaged in development, testing, product management, quality
assurance and documentation. The research and development team, located in
Ottawa, consists of people with broad experience in e-forms and workflow and
related technologies. The Company's research and development projects include
development of JetForm's e-process web-centric product which builds on the key
strengths of the Company's current product lines, maintenance and enhancements
for all current product lines, integration with third-party hardware and
software products and support for double-byte characters for Asian languages.
Competition
JetForm's products are used to build applications -- often for the Web --
that automate simple to complex processes in a wide range of industries, across
all lines of business -- including operations, product development, finance,
purchasing, HR, sales and marketing areas. There is a range of tool vendors for
e-forms (Shana, UWI), workflow (Action Technologies, KeyFile, Staffware) and
print & output (Optio, Streamserve). Many customers purchase these tools on a
standalone basis and build applications with them. JetForm competes with these
vendors by providing a feature-rich, integrated, end-to-end solution with rich
functionality and high ease of use, that supports multiple client and server
environments, including the Web.
Other organizations build applications themselves using development tools
(Visual Interdev, Java, C++, etc.) and existing infrastructure (e-mail,
groupware, web servers,etc.).
In February 1999, JetForm announced that it would begin to develop packaged
applications for workplace automation that address specific, line-of-business
needs and leverage the e-process framework. These e-process applications will
compete with companies such as Concur, Interlynx and Talx in the Employee Self
Service market. Here, the basis of competition includes product features, ease
of integration (with other applications and databases), reusability,
flexibility, pricing, maturity of the underlying framework of technologies and
completeness of whole product offering.
Finally, the Company continues to compete against paper-processes, or
"p-processes". Organizations' unwillingness to transition from p-processes to
e-processes poses a significant challenge to the Company.
Intellectual Property
The Company distributes its products under software license agreements
which generally grant customers perpetual licenses to use, rather than own, the
Company's products and which contain various provisions protecting the Company's
ownership and confidentiality of the underlying technology. The source code of
the Company's products is protected as a trade secret and as unpublished
copyrighted work. The Company also periodically obtains licenses to use or copy
software written or supplied by third parties for inclusion into or as part of
the functionality of the Company's products. Such licenses usually are perpetual
in nature, subject to the regular payment of royalties by the Company as
specified in the licenses and generally on terms and conditions comparable to
those terms on which the Company licenses its own products. The Company has
registered JetForm as a trademark in the United States and Canada and has
applications issued or pending in all foreign countries in which it has
distributor representation. The Company acquired, as part of the Delrina Assets,
all of Delrina's relevant trademarks including FormFlow.
Employees
As of April 30, 1999, the Company had 664 employees of which 620 were
full-time employees. Full-time employees include 173 in research and
development, 101 in North American sales, 85 in international sales, 24 in
marketing, 168 in systems and consulting services and 69 in management and
internal corporate services. Of the total full-time employees, 436 are located
in Canada, 73 are located in the United States, 12 are located in the United
Kingdom, 18 are located in France, 13 are located in Australia, 24 are located
in Ireland, 13 are located in Germany, 13 are located in Sweden, 4 are located
in Singapore, 5 are located in China and 9 are located in Japan. None of the
Company's employees is represented by a labor union or subject to a collective
bargaining agreement, and the Company believes that its relations with its
employees are good.
Item 2. PROPERTIES
Facilities
The following table sets forth the location of the principal offices of the
Company, their uses, and the lease expiry date. The Company considers its
facilities to be in good condition and adequate for its needs and that
additional suitable space is available to accommodate further expansion as
needed. The specific location of these facilities is not material to the
Company's business.
Location Use Lease Expiry
Ottawa, Ontario, Canada Executive offices, customer September 2006
support, consulting services,
multimedia products, training
services, sales, marketing
and administration
North Sydney, Australia Pacific Rim sales, marketing March 2000
and services
Toronto, Ontario, Canada Vacant July 2007
Falls Church, Virginia, USA U.S. Government sales and April 2000
marketing headquarters,
regional sales
Dallas, Texas, USA Regional sales office December 1999
Pleasanton, California, USA Regional sales office October 2001
Boulogne, France Regional sales office July 2002
Falkenberg, Sweden Regional sales office June 2000
Stockholm, Sweden Regional sales office December 2000
Orpington, Kent, UK Vacant March 2010
Droitwich, Worcester, UK Vacant December 2008
Beijing, China Regional sales office March 2000
Ratingen, Germany Regional sales office April 2002
Singapore Regional sales office August 1999
Oak Brook, Illinois USA Regional sales office June 2000
New York, New York USA Regional sales office April 2005
Burlingame, California USA Services office December 1999
Atlanta, Georgia USA Regional sales office October 1999
Boston, Massachusetts USA Regional Sales Office December 1999
Tokyo, Japan Asia Pacific Office January 2002
Thames Valley, UK Regional Sales Office October 1999
Dublin, Ireland European Services Centre January 2024
Item 3. LEGAL PROCEEDINGS
The Company is not a party to any material litigation.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the year ended April 30, 1999.
<PAGE>
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Price Range of Common Shares
The Company's Common Shares are quoted on the NASDAQ National Market under
the symbol "FORM", the Pacific Stock Exchange under the symbol "JTF", and on The
Toronto Stock Exchange under the symbol "JFM". The following table sets forth,
for the periods indicated, the high and low closing sales prices of the Common
Shares as reported on the NASDAQ National Market.
High Low
Year Ended April 30, 1998
First Quarter....................... US$16.62 US$11.00
Second Quarter...................... 17.43 12.75
Third Quarter....................... 17.37 11.62
Fourth Quarter...................... 23.75 12.25
Year Ended April 30, 1999
First Quarter....................... US$22.88 US$15.63
Second Quarter...................... 20.38 12.25
Third Quarter....................... 15.25 9.63
Fourth Quarter...................... 11.63 3.13
Holders
As of July 26, 1999, there were 296 holders of record of Common Shares. A
substantial number of Common Shares of the Company are held by depositories,
brokerage firms and financial institutions in "street name". Based upon the
number of annual reports and proxy statements requested by such nominees,
management of the Company estimates that there are more than 13,000 beneficial
holders of Common Shares.
Dividends
During the fiscal years ended April 30, 1999, 1998 and 1997, the Company
did not declare or pay cash dividends on its Common Shares, and does not
anticipate paying any dividends in the foreseeable future, but intends to retain
future earnings for reinvestment to finance the growth of its business.
Limitations Affecting Security Holders
There is no law or government decree or regulation in Canada that restricts
the export or import of capital, or affects the remittances of dividends,
insurance or other payments to a non-resident holder of Common Shares, other
than the withholding tax requirements described below.
Taxation
The following discussion summarizes certain tax considerations relevant to
an investment by individuals and corporations who, for income tax purposes, are
resident in the United States and not in Canada, hold Common Shares as capital
property, and do not use or hold the Common Shares in carrying on business
through a permanent establishment or in connection with a fixed base in Canada
(collectively, "Unconnected US Shareholders"). The Canadian tax consequences of
an investment in the Common Shares by investors who are not Unconnected US
Shareholders may be expected to differ substantially from the tax consequences
discussed herein. The discussion is based upon the provisions of the Income Tax
Act (Canada) (the "Tax Act"), the Convention between Canada and the United
States of America with respect to taxes on Income and on Capital (the
"Convention") and the published administrative practices of Revenue Canada,
Taxation and judicial decisions, all of which are subject to change. This
discussion does not take into account the tax laws of the various provinces or
territories of Canada.
This discussion is intended to be a general description of the Canadian tax
considerations and does not take into account the individual circumstances of
any particular shareholder.
Any cash dividends and stock dividends on the Common Shares payable to
Unconnected US Shareholders generally will be subject to Canadian withholding
tax. Under the Convention, the rate of withholding tax generally applicable to
Unconnected US Shareholders is 15%. In the case of a United States corporate
shareholder owning 10% or more of the voting shares of the Company, the
applicable withholding tax under the Convention is 5% for 1998 and following
years. Capital gains realized on the disposition of Common Shares by Unconnected
US Shareholders will not be subject to tax under the Tax Act unless such Common
Shares are taxable Canadian property within the meaning of the Tax Act. Common
Shares will generally not be taxable Canadian property to a holder unless, at
any time during the five-year period immediately preceding a disposition, the
holder, or persons with whom the holder did not deal at arm's length, or any
combination thereof, owned 25% or more of the issued shares of any class or
series of the Company. If the Common Shares are considered taxable Canadian
property to a holder, the Convention will generally exempt Unconnected US
Shareholders from tax under the Tax Act in respect of a disposition of Common
Shares provided the value of the shares of the Company is not derived
principally from real property situated in Canada. Neither Canada nor any
province thereof currently imposes any estate taxes or succession duties.
<PAGE>
Item 6. SELECTED FINANCIAL DATA
The selected consolidated financial data as at and for each of the years in
the five year period ended April 30, 1999, have been derived from the Company's
audited Consolidated Financial Statements and Notes thereto, included in Item 8.
"Financial Statements and Supplementary Data", and should be read in conjunction
therewith.
The Consolidated Financial Statements are prepared on the basis of U.S.
GAAP and are expressed in Canadian dollars. See Item 7. "Management's Discussion
and Analysis of Financial Condition and Results of Operations."
<TABLE>
<CAPTION>
Year ended April 30,
-------------------------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ------------ -----------
(in thousands of Canadian dollars, except share and per share amounts)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues
Product........................ $ 66,662 $ 74,781 $ 54,935 $ 31,600 $ 17,184
Service........................ 47,550 36,446 21,679 11,855 8,825
----------- ----------- ----------- ------------ -----------
114,212 111,227 76,614 43,455 26,009
----------- ----------- ----------- ------------ -----------
Costs and expenses
Cost of product................ 9,164 7,539 4,677 2,491 1,246
Cost of service................ 19,058 15,259 10,805 6,125 6,168
Sales and marketing............ 53,315 40,214 29,140 16,697 8,592
General and
administrative................. 10,722 9,846 8,618 5,513 5,039
Research and
development.................... 15,384 10,620 7,422 3,905 1,889
Depreciation and
amortization................... 11,568 11,631 8,190 3,593 1,196
Provision for Restructuring
Costs (1)...................... 30,503 -- -- -- --
Repurchase of Moore
Options(2)..................... -- -- 47,084 -- --
In process research and
development(3)................. -- -- 106,962 -- --
----------- ----------- ----------- ------------ -----------
149,714 95,109 222,898 38,324 24,130
----------- ----------- ----------- ------------ -----------
Operating income (loss)........ (35,502) 16,118 (146,284) 5,131 1,879
Interest and other income
(expense)...................... 3,815 (3,564) (2,003) 1,466 1,574
----------- ----------- ----------- ------------ -----------
Income (loss) before
taxes.......................... (31,687) 12,554 (148,287) 6,597 3,453
Provision for (recovery of)
income taxes................... (2,552) 1,690 193 2,449 698
----------- ----------- ----------- ------------ -----------
Net income (loss).............. $ (29,135) $ 10,864 $ (148,480) $ 4,148 $ 2,755
=========== =========== =========== ============ ===========
Basic income (loss) per
share..........................
Net income (loss) per
share.......................... $ (1.47) $ 0.65 $ (10.03) $ 0.39 $ 0.29
Weighted average number of
shares......................... 19,826,057 16,622,835 14,796,852 10,650,807 9,559,411
Fully diluted income (loss)
per share......................
Net income (loss) per
share.......................... $ (1.47) $ 0.62 $ (10.03) $ 0.34 $ 0.24
Weighted average number of
shares......................... 19,826,057 17,615,595 14,796,852 12,137,946 11,527,240
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
As at April 30,
---------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- ----------- ----------- ----------- -----------
(in thousands of Canadian dollars)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents.......... $ 47,262 $ 91,604 $ 34,450 $ 20,198 $ 28,746
Accounts receivable................ 29,274 31,347 24,276 8,482 7,104
Term accounts receivable........... 19,576 13,187 11,676 11,260 375
Working capital.................... 45,054 70,370 30,409 29,716 37,979
Total assets....................... 156,869 216,567 142,988 88,879 51,651
Long term debt including current
maturities......................... 32,557 73,404 101,518 -- --
Shareholders' equity............. 84,930 112,149 16,089 67,033 46,689
</TABLE>
- ---------------
(1) On March 17, 1999 the Company announced a restructuring plan which included
the write-down of certain capital assets, reduction in the number of
employees, closure of certain facilities and other costs totaling $30.5
million. See Note 15 to the Consolidated Financial Statements included
elsewhere in this Form 10-K.
(2) Effective June 27, 1996, the Company repurchased the Moore Options for
consideration of US$34.0 million, paid for by the issuance of 1,813,334
Common Shares. See Note 10 to the Consolidated Financial Statements
included elsewhere in this Form 10-K.
(3) On September 10, 1996, the Company acquired certain assets including title
to intellectual property, that were formerly part of the E-Forms software
group of Delrina Corporation. During the year ended April 30, 1997, the
Company recorded a non-recurring charge of $107.0 million for purchased in
process research and development relating to this acquisition. See Note 14
to the Consolidated Financial Statements included elsewhere in this Form
10-K.
<PAGE>
The Company publishes its consolidated financial statements in Canadian
dollars. The following table sets forth, for the periods indicated, certain
exchange rates based on the exchange rates reported by the Federal Reserve Bank
of New York as the noon buying rates in New York City for cable transfers in
foreign currencies, as certified for customs purposes (the "Noon Buying Rate").
Such rates quoted are the number of U.S. dollars per Canadian dollar and are the
inverse of the Noon Buying Rate.
<TABLE>
<CAPTION>
Year ended April 30,
----------- ----------- ----------- ----------- -----------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
High....................... US$0.6882 US$0.7317 US$0.7513 US$0.7527 US$0.7457
Low........................ 0.6341 0.6832 0.7145 0.7224 0.7023
Average(1)................. 0.6601 0.7093 0.7329 0.7344 0.7252
Period End................. 0.6863 0.6992 0.7157 0.7342 0.7374
</TABLE>
- ---------------
(1) The average of the month-end exchange rates during such periods.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Introduction
The following discussion of the Company's results of operations and of its
liquidity and capital resources should be read in conjunction with the
information contained in the Consolidated Financial Statements and related Notes
thereto. The following discussion provides a comparative analysis of material
changes for the years ended April 30, 1999, 1998 and 1997, in the financial
condition and results of operations of the parent company ("JetForm") and its
wholly-owned subsidiaries: JetForm Corporation (a Delaware corporation), JetForm
Pacific Pty Limited ("JetForm Pacific"), JetForm Scandinavia AB ("JetForm
Nordic"), JetForm France SA ("JetForm France"), JetForm UK Limited ("JetForm
UK"), JetForm Deutschland GmbH ("JetForm Germany"), JetForm Technologies Limited
("JetForm Ireland"), JetForm Japan K.K. ("JetForm Japan"), JetForm PTE Ltd
("JetForm Singapore"), and Why Interactive Inc. ("Why Interactive"). JetForm and
its wholly-owned subsidiaries are collectively referred to herein as the
"Company".
Results of Operations
The Company's revenues and operating results have varied substantially from
period to period. With the exception of its consulting services operation, the
Company has historically operated with little backlog of orders because its
software products are generally shipped as orders are received. The Company
records product revenue from packaged software and irrevocable commitments to
purchase products when persuasive evidence of an arrangement exists, the
software product has been shipped, there are no significant uncertainties
surrounding product acceptance, the fees are fixed and determinable, and
collection is considered probable. As a result, product revenue in any period is
substantially dependent on orders booked and shipped in that period and on the
receipt of irrevocable commitment license agreements. Product revenue is
difficult to forecast due to the fact that the Company's sales cycle, from
initial trial to multiple copy licenses, varies substantially from customer to
customer. As a result, variations in the timing of product sales can cause
significant variations in operating results from period to period. Product
revenue represented 58% of total revenue for the year ended April 30, 1999.
Service revenue, which primarily consists of custom software development,
forms development, training, maintenance and support, E-Forms consulting
services and multimedia consulting services, represented 42% of total revenue
for the year ended April 30, 1999. Service revenue increased at a compound
annual rate of 48% to $47.6 million for the year ended April 30, 1999 from $21.7
million for the year ended April 30, 1997. The increase in service revenue has
been a result of growth in maintenance and support revenue and increased focus
on bundling the Company's services with product sales. Subsequent to April 30,
1999 the Company sold its multimedia subsidiary, Why Interactive to a third
party for $6.4 million. The annual consolidated revenues of Why Interactive were
$4.0 million, $3.7 million and $1.6 million in fiscal years 1999, 1998 and 1997,
respectively.
Costs and expenses are comprised of cost of product, cost of service, sales
and marketing, general and administrative, research and development,
depreciation and amortization and other expenses. Cost of product consists of
third party commissions, the cost of disks, manuals, packaging, freight, royalty
payments to vendors whose software is bundled with certain products and
amortization of deferred product development costs. Cost of service includes all
costs of providing technical support, training, consulting, custom forms
development and application development services. Sales and marketing expenses
are principally related to salaries and commissions paid to sales and marketing
personnel and the cost of marketing programs. Research and development expenses
include personnel and occupancy costs as well as the costs of software
development, testing, product management, quality assurance and documentation.
Depreciation and amortization includes depreciation and amortization of fixed
assets and amortization of intangible assets related to the acquisition from
Delrina Corporation ("Delrina") of its E-Forms Technology (the "Delrina
Assets"), goodwill and distribution rights relating to the acquisitions of
JetForm UK, Proactive Systems S.A. ("Proactive France"), JetForm Germany,
Eclipse Corporation ("Eclipse"), Why Interactive, JetForm Pacific, JetForm
Nordic and JetForm France, and other intangible assets. The Company amortizes
goodwill and distribution rights over their expected useful lives. The Company
periodically reviews the carrying value of its capital assets. Any impairments
in the carrying value are recognized at that time.
The following table sets forth, on a comparative basis for the periods
indicated, the components of the Company's product margin, service margin and
product and service margin:
<TABLE>
<CAPTION>
Year ended April 30,
----------------------------------------------------------------------------
1999 1998 1997
---------------------- ----------------------- ----------------------
(in thousands of Canadian dollars)
<S> <C> <C> <C> <C> <C> <C>
Product revenue.... $ 66,662 100% $ 74,781 100% $54,935 100%
Cost of product.... 9,164 14% 7,539 10% 4,677 9%
========== ======== ========== ========= ========== =========
Product margin..... $ 57,498 86% $ 67,242 90% $50,258 91%
========== ======== ========== ========= ========== =========
Service revenue........... $ 47,550 100% $ 36,446 100% $21,679 100%
Cost of service........... 19,058 40% 15,259 42% 10,805 50%
========== ======== ========== ========= ========== =========
Service margin............ $ 28,492 60% $ 21,187 58% $10,874 50%
========== ======== ========== ========= ========== =========
Total revenue............. $114,212 100% $111,227 100% $76,614 100%
Costs of product and
service................. 28,222 25% 22,798 20% 15,482 20%
========== ======== ========== ========= ========== =========
Product and service
margin.................. $ 85,990 75% $ 88,429 80% $61,132 80%
========== ======== ========== ========= ========== =========
</TABLE>
The following table presents, for the periods indicated, consolidated statement
of operations data expressed as a percentage of total revenues:
<TABLE>
<CAPTION>
Year ended April 30,
---------------------------------------------
1999 1998 1997
------------- ------------ ------------
<S> <C> <C> <C>
REVENUES
Product................................ 58% 67% 72%
Service................................ 42% 33% 28%
------------- ------------ ------------
100% 100% 100%
------------- ------------ ------------
COSTS AND EXPENSES
Cost of product........................ 8% 7% 6%
Cost of service........................ 17% 14% 14%
Sales and marketing.................... 47% 36% 38%
General and administrative............. 9% 9% 11%
Research and development............... 13% 10% 10%
Depreciation and amortization.......... 10% 10% 11%
Provision for Restructuring Costs...... NM -- --
Repurchase of Moore Options............ -- -- NM
In process research and development.... -- -- NM
------------- ------------ ------------
NM 86% NM
------------- ------------ ------------
OPERATING INCOME (LOSS).................. NM 14% NM
Interest and other income (expense)...... 3% -3% -3%
INCOME (LOSS) BEFORE TAXES............... NM 11% NM
Provision for income taxes............... NM -2% NM
============= ============ ============
NET INCOME (LOSS)........................ NM 10% NM
============= ============ ============
- ----------------
NM -- not meaningful
</TABLE>
The following table provides details of product revenue by geographic
segment and, within Canada and the United States of America, by distribution
channel:
<TABLE>
<CAPTION>
Year ended April 30, Period to Period Increase
---------------------------------------- ---------------------------------
1999 1998 1997 1998 to 1999 1997 to 1998
----------- ---------- ----------- -------------- ---------------
(in thousands of Canadian dollars)
<S> <C> <C> <C> <C> <C>
Product revenue by region
United States and Canada $ 42,286 $54,226 $ 38,818 -22% 40%
Europe 20,051 16,832 13,745 19% 22%
Rest of World 4,325 3,723 2,372 16% 57%
=========== ========== ===========
$ 66,662 $74,781 $ 54,935 -11% 36%
=========== ========== ===========
Product revenue by channel in
the United States and Canada
Reseller and OEM $ 24,779 $36,614 $ 19,358 -32% 89%
Direct Sales 17,507 17,612 19,460 -1% -9%
=========== ========== ===========
$ 42,286 $54,226 $ 38,818 -22% 40%
=========== ========== ===========
</TABLE>
Year Ended April 30, 1999, Compared to the Year Ended April 30, 1998
Revenues
Total Revenues. Total revenues increased 3% to $114.2 million for the year
ended April 30, 1999 from $111.2 million for the year ended April 30, 1998.
Total revenues consisted of 58% product revenue and 42% service revenue for the
year ended April 30, 1999.
Product Revenue. Product revenue decreased 11% to $66.7 million for the
year ended April 30, 1999 from $74.8 million for the year ended April 30, 1998.
Product revenue derived from North America, Europe and Rest of World represented
63%, 30%, and 7%, respectively, of product revenue for the year ended April 30,
1999, as compared to 72%, 23% and 5%, respectively, of product revenue for the
year ended April 30, 1998.
The Company attributes the decrease in product revenue primarily to
external market factors including the Year 2000 issue, a shift towards Internet
based solutions from traditional client/server solutions, and the emergence of
new competitors selling pre-packaged solutions.
The Year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date sensitive systems may recognize the
Year 2000 as 1900 or some other date, resulting in errors when information using
Year 2000 dates is processed. As a result, the Company's primary customer base,
large financial services organizations and government agencies, who are deeply
affected by the Year 2000 problem due to their reliance on computer systems,
have focused their information technology resources on ensuring Year 2000
readiness. This has dramatically impacted the Company's ability to sell
enterprise wide licenses to these customers. The Company expects that the Year
2000 issue will have a continuing impact on product sales for its fiscal year
2000.
During the latter part of the fiscal 1999 year the Company also experienced
a shift of focus by its customers to Internet-based solutions from more
traditional client/server solutions and the emergence of new competitors selling
pre-packaged solutions. The Company has developed a comprehensive strategy to
address both the market for Internet-based solutions and prepackaged
applications which will be implemented in fiscal year 2000. However, there can
be no assurance that revenue derived from this strategy will be sufficient to
offset the potential decrease in revenue from the Company's client/server
products.
Product revenue derived from North America decreased 22% to $42.3 million
for the year ended April 30, 1999 from $54.2 million for the year ended April
30, 1998. Reseller and OEM sales, which represented 59% of North American
product revenue, decreased 32% to $24.8 million for the year ended April 30,
1999 from $36.6 million for the year ended April 30, 1998, primarily due to
significant sales from U.S. government resellers and minimum commitments for
resale by Moore Corporation Limited in fiscal year 1998. Product revenue from
direct sales, which represented 41% of North American product revenue, decreased
1% to $17.5 million for the year ended April 30, 1999 from $17.6 million for the
year ended April 30, 1998.
Product revenue derived from Europe increased 19% to $20.1 million for the
year ended April 30, 1999 from $16.8 million for the year ended April 30, 1998,
primarily due to increased license revenue from Germany.
Product revenue derived from Rest of World increased 16% to $4.3 million
for the year ended April 30, 1999 from $3.7 million for the year ended April 30,
1998, primarily due to increased license revenue from Japan.
Service Revenue. Service revenue increased 30% to $47.6 million for the
year ended April 30, 1999 from $36.4 million for the year ended April 30, 1998.
For the year ended April 30, 1999, maintenance and support revenue increased 25%
to $21.9 million from $17.5 million for the year ended April 30, 1998. The
Company's other service revenue increased 35% to $25.6 million for the year
ended April 30, 1999 from $19.0 million for the year ended April 30, 1998.
Costs and Expenses
Total Costs and Expenses. Total costs and expenses were $149.7 million for
the year ended April 30, 1999, an increase of 57% from $95.1 million for the
year ended April 30, 1998. Excluding the provision for restructuring costs of
$30.5 million, costs and expenses for the year ended April 30, 1999, increased
by 25%.
Cost of Product. Cost of product increased 22% to $9.2 million for the year
ended April 30, 1999 from $7.5 million for the year ended April 30, 1998,
primarily as a result of an increase in third party royalties and amortization
of deferred development costs. For the year ended April 30, 1999, total deferred
costs charged to cost of product increased to $3.3 million from $2.2 million for
the year ended April 30, 1998. The product margin decreased to 86% for the year
ended April 30, 1999 from 90% for the year ended April 30, 1998, primarily due
to lost economies of scale resulting from the decrease in product revenue.
Cost of Service. Cost of service increased 25% to $19.1 million for the
year ended April 30, 1999 from $15.3 million for the year ended April 30, 1998,
primarily as a result of an increase in the number of employees, particularly in
Ireland, due to the expansion in the Company's service revenues. The service
margin increased to 60% for the year ended April 30, 1999 from 58% for the year
ended April 30, 1998, primarily as a result of gained economies of scale
resulting from increased maintenance and support revenue.
Costs of Product and Service. Costs of product and service increased 24% to
$28.2 million for the year ended April 30, 1999 from $22.8 million for the year
ended April 30, 1998. Product and service margin decreased to 75% for the year
ended April 30, 1999 from 80% for the year ended April 30, 1998.
Sales and Marketing. Sales and marketing expenses increased 33% to $53.3
million for the year ended April 30, 1999 from $40.2 million for the year ended
April 30, 1998, primarily as a result of increased sales and marketing staff. As
a percentage of total revenues, sales and marketing increased to 47% for the
year ended April 30, 1999 from 36% for the year ended April 30, 1998
General and Administrative. General and administrative expenses increased
9% to $10.7 million for the year ended April 30, 1999 from $9.8 million for the
year ended April 30, 1998, primarily due to increased spending on management
information systems and facilities. As a percentage of total revenues, general
and administrative remained constant at 9% for the years ended April 30, 1999
and 1998.
Research and Development. Research and development expenses increased 45%
to $15.4 million for the year ended April 30, 1999 from $10.6 million for the
year ended April 30, 1998, primarily due to an increase in the number of
employees and related costs. During the years ended April 30, 1999 and 1998, the
Company capitalized approximately $3.6 million and $2.8 million respectively, of
software development costs. Research and development expense were 23% and 14% of
product revenue for the years ended April 30, 1999 and 1998, respectively.
Depreciation and Amortization. Depreciation and amortization remained
constant at $11.6 million for both the year ended April 30, 1999 and 1998,
primarily as a result of increased purchases of computer equipment and leasehold
improvements offset by the write-down of certain assets relating to the
restructuring of the Company. (see "Liquidity and Capital Resources - Provision
for Restructuring Costs").
Provision for Restructuring Costs. During the year ended April 30, 1999,
the Company recorded a provision for restructuring costs of $30.5 million. The
restructuring plan announced by the Company included: i) consolidation of
management responsibilities and reduction in headcount; ii) closure of redundant
facilities; iii) reduction in the carrying value of certain capital assets
primarily related to past acquisitions and; iv) cancellation of trade shows and
other commitments. (see "Liquidity and Capital Resources - Provision for
Restructuring Costs").
Operating Income (Loss). Operating loss was $35.5 million for the year
ended April 30, 1999, compared to operating income of $16.1 million for the year
ended April 30, 1998 primarily due to the provision for restructuring costs.
Excluding this charge, operating loss was $5.0 million for the year ended April
30, 1999.
Interest and Other Income. Net interest and other income was $3.8 million
for the year ended April 30, 1999, compared to a net interest expense of $3.6
million for the year ended April 30, 1998 primarily due to a reduction in
interest charges on the Delrina obligation and an increase in investment income
on cash and cash equivalents. On February 12, 1998, the Company and Delrina
re-negotiated certain terms of the asset purchase agreement whereby the Company
agreed to accelerate payment of its obligation in consideration for a reduction
in the effective interest rate which resulted in a reduction of imputed interest
charges (see "Liquidity and Capital Resources - Delrina Obligation"). In April,
1998, the Company received net proceeds of $63.7 million from the issuance of
2.2 million special warrants to Canadian investors.
Income Taxes. The Company recorded a provision for current income taxes of
$2.1 million and a recovery of deferred income tax of $4.6 million, for the year
ended April 30, 1999, compared to a provision for current income taxes of $2.0
million and a recovery of deferred income tax of $355,000 for the year ended
April 30, 1998. As at April 30, 1999, the Company had a deferred tax asset of
$56.8 million comprised primarily of deductible temporary differences related to
the Delrina Assets and the provision for restructuring costs. The Company
believes sufficient uncertainty exists regarding the realizability of this net
deferred tax asset such that a valuation allowance of $49.2 million has been
applied.
Year Ended April 30, 1998, Compared to the Year Ended April 30, 1997
Revenues
Total Revenues. Total revenues increased 45% to $111.2 million for the year
ended April 30, 1998 from $76.6 million for the year ended April 30, 1997. Total
revenues consisted of 67% product revenue and 33% service revenue for the year
ended April 30, 1998.
Product Revenue. Product revenue increased 36% to $74.8 million for the
year ended April 30, 1998 from $54.9 million for the year ended April 30, 1997.
Product revenue derived from North America, Europe and Rest of World represented
72%, 23%, and 5%, respectively, of product revenue for the year ended April 30,
1998, as compared to 71%, 25% and 4%, respectively, of product revenue for the
year ended April 30, 1997.
Product revenue derived from North America increased 40% to $54.2 million
for the year ended April 30, 1998 from $38.8 million for the year ended April
30, 1997. Reseller and OEM sales, which represented 68% of North American
product revenue, increased 89% to $36.6 million for the year ended April 30,
1998 from $19.4 million for the year ended April 30, 1997, primarily as a result
of a general increase in large orders from OEMs and VARs including a significant
increase in U.S. government sales by resellers and minimum commitments for
resale by Moore Corporation Limited ("Moore") Product revenue from end users,
which represented 32% of North American product revenue, decreased 9% to $17.6
million for the year ended April 30, 1998 from $19.5 million for the year ended
April 30, 1997, primarily as a result of the Company's decision to redirect
certain U.S. government sales to resellers which would have been made by direct
sales in previous years.
Product revenue derived from Europe increased 22% to $16.8 million for the
year ended April 30, 1998 from $13.7 million for the year ended April 30, 1997,
primarily due to increased license revenue from Germany and Scandinavia.
Product revenue derived from Rest of World increased 57% to $3.7 million
for the year ended April 30, 1998 from $2.4 million for the year ended April 30,
1997, primarily due to increased license revenue from China and Japan.
Service Revenue. Service revenue increased 68% to $36.4 million for the
year ended April 30, 1998 from $21.7 million for the year ended April 30, 1997,
primarily as a result of increased maintenance and support revenue in North
America and Europe.
Costs and Expenses
Total Costs and Expenses. Total costs and expenses were $95.1 million for
the year ended April 30, 1998, a decrease of 57% from $222.9 million for the
year ended April 30, 1997. Excluding charges for in process research and
development and the repurchase of Moore Options which aggregated $154.0 million
for the year ended April 30, 1997, costs and expenses for the year ended April
30, 1998, increased by 38%.
Cost of Product. Cost of product increased 61% to $7.5 million for the year
ended April 30, 1998 from $4.7 million for the year ended April 30, 1997,
primarily as a result of increased product revenue and amortization of deferred
development costs. The product margin decreased to 90% for the year ended April
30, 1998 from 91% for the year ended April 30, 1997, primarily due to increased
amortization of deferred product development costs. For the year ended April 30,
1998, total deferred costs charged to cost of product increased to $2.2 million
from $544,000 for the year ended April 30, 1997.
Cost of Service. Cost of service increased 41% to $15.3 million for the
year ended April 30, 1998 from $10.8 million for the year ended April 30, 1997,
primarily as a result of an increase in the number of employees due to the
expansion in the Company's service revenues. The service margin increased to 58%
for the year ended April 30, 1998 from 50% for the year ended April 30, 1997,
primarily as a result of increased maintenance and support revenue.
Costs of Product and Service. Costs of product and service increased 47% to
$22.8 million for the year ended April 30, 1998 from $15.5 million for the year
ended April 30, 1997. Product and service margin remained constant at 80% for
both the year ended April 30, 1998 and 1997.
Sales and Marketing. Sales and marketing expenses increased 38% to $40.2
million for the year ended April 30, 1998 from $29.1 million for the year ended
April 30, 1997, primarily as a result of the expansion of the Company's world
wide sales and marketing staff.
General and Administrative. General and administrative expenses increased
14% to $9.8 million for the year ended April 30, 1998 from $8.6 million for the
year ended April 30, 1997, primarily due to the expansion of the Company's
European operations and increased spending on management information systems. As
a percentage of total revenues, general and administrative expenses decreased to
9% from 11% for the years ended April 30, 1998 and 1997, respectively.
Research and Development. Research and development expenses increased 43%
to $10.6 million for the year ended April 30, 1998 from $7.4 million for the
year ended April 30, 1997, primarily due to an increase in the number of
employees and related costs. During the years ended April 30, 1998 and 1997, the
Company capitalized approximately $2.8 million and $2.6 million respectively, of
software development costs. Research and development expenses were 14% of
product revenue for both the years ended April 30, 1998 and 1997.
Depreciation and Amortization. Depreciation and amortization increased 42%
to $11.6 million for the year ended April 30, 1998 from $8.2 million for the
year ended April 30, 1997, primarily as a result of increased purchases of
computer equipment and leasehold improvements and the acquisition of the Delrina
Assets in September 1996 (See "Liquidity and Capital Resources - Delrina
Obligation").
Operating Income (Loss). Operating income was $16.1 million for the year
ended April 30, 1998, compared to a loss of $146.3 million for the year ended
April 30, 1997, primarily due to charges, in fiscal 1997, for the repurchase of
Moore Options and in process research and development. Excluding these charges,
operating income was $7.8 million for the year ended April 30, 1997.
Interest and Other Income. Net interest expense decreased to $3.6 million
for the year ended April 30, 1998, compared to net interest expense of $3.7
million for the year ended April 30, 1997.
Income Taxes. The Company recorded a provision for income taxes of $2.0
million and a recovery of deferred taxes of $355,000 for the year ended April
30, 1998, compared to a provision for income taxes of $1.1 million and a
recovery of deferred taxes of $904,000 for the year ended April 30, 1997. As at
April 30, 1998, the Company had a net deferred tax asset of $50.5 million
comprised primarily of deductible temporary differences related to the Delrina
Assets. The Company believes sufficient uncertainty exists regarding the
realizability of this net deferred tax asset such that a valuation allowance of
$43.9 million has been applied.
Liquidity and Capital Resources
As at April 30, 1999 and April 30, 1998, the Company had $47.3 million and
$91.6 million of cash and cash equivalents respectively. During the year ended
April 30, 1999, the Company's cash and cash equivalents decreased by $44.3
million, primarily due to four payments to Delrina totaling $50.8 million. (See
"Liquidity and Capital Resources - Delrina Obligation.")
Operations
The Company decreased its investment in the non-cash operating components
of working capital during the year ended April 30, 1999, by approximately $9.1
million, primarily due to increases in accounts payable, accrued liabilities,
and deferred revenue offset by an increase in accounts receivable.
The Company purchased approximately $8.3 million of fixed assets in the
year ended April 30, 1999. The purchases of fixed assets included computer
hardware and software, office equipment, furniture, and leasehold improvements.
During the year ended April 30, 1999, the Company increased its investment in
other assets by $5.8 million related primarily to capitalized development costs,
prepaid royalties, and purchases of other assets.
During the year ended April 30, 1999, the Company generated cash of
approximately $3.0 million relating to the exercise of stock options and
warrants by employees and others.
Accounts Receivable and Term Accounts Receivable
Total accounts receivable and term accounts receivable increased $4.4
million to $48.9 million at April 30, 1999 from $44.5 million at April 30, 1998,
primarily due an increase in the proportion of product orders processed in the
last month of the year and an increase in orders with payment dates exceeding
the Company's customary trade terms. Accounts receivable decreased to $29.3
million at April 30, 1999 from $31.3 million at April 30, 1998. Term accounts
receivable, which are accounts receivable with contracted payment dates
exceeding the Company's customary trade terms, increased by $6.4 million to
$19.6 million for the year ended April 30, 1999 from $13.2 million on April 30,
1998.
Term accounts receivable primarily arise from the recording of revenue from
Irrevocable Commitment Licenses. Under an Irrevocable Commitment License, a
customer commits to pay a minimum amount over a specified period of time in
return for the right to use or resell up to a specific number of copies of a
delivered product for a fixed amount. The amount of revenue recorded is the
amount of the minimum commitment over the term of the license, less deemed
interest for that part of the license term that is beyond the Company's
customary trade terms.
Payments under Irrevocable Commitment Licenses are generally received from
the customer on the earlier of (i) installation of the Company's products by the
customer or delivery to its customers or end users and (ii) specified minimum
payment dates in the license agreement. Amounts by which revenues recorded
exceed payments received are recorded as accounts receivable. Payments that are
expected beyond the Company's customary trade terms are recorded as term
accounts receivable. Payments that are expected to be received more than one
year from the balance sheet date, are recorded as non-current term accounts
receivable. Total license fees over the term of the Irrevocable Commitment
License may be greater than the minimum commitment initially recorded as
revenue. Revenues from installations or sales of the Company's products in
excess of the minimum commitment are recorded by the Company as and when they
are reported by the customer.
Provision for Restructuring Costs
On March 17, 1999, the Corporation announced a restructuring plan directed
at reducing costs. The key restructuring actions included:
o Consolidation of management responsibilities and reduction in
headcount.
o Closure of redundant facilities.
o Reduction in the carrying value of certain capital assets primarily
related to past acquisitions.
o Cancellation of certain commitments and other costs.
The following table summarizes the activity in the provision for
restructuring costs during the year:
<TABLE>
<CAPTION>
Employee Other Total Non Cash Total
Termination Facilities Cash Costs Cash Costs Costs Provision
-------------- ------------- ------------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Restructuring
provision............... $ 5,252 $ 2,914 $ 726 $ 8,892 $ 21,611 $ 30,503
Cash payments........... (1,175) (36) (207) (1,418) -- (1,418)
Non-cash items.......... -- -- -- -- (21,611) (21,611)
--------------------------------------------------------------------------------------
Balance,
April 30, 1999......... $ 4,077 $ 2,878 $ 519 $ 7,474 $ -- $ 7,474
======================================================================================
Long term balance....... $ 500 $ 2,307 $ 418 $ 3,225 $ $ 3,225
======================================================================================
</TABLE>
Employee terminations totalled 105 and included 46 in sales and marketing,
40 in research in development, 12 in internal corporate services, and 7 in
systems and consulting services. All employees were terminated on or before
April 30, 1999.
Facilities costs consisted primarily of $2.1 million and $780,000 related
to the closure of the Company's UK and Toronto facilities respectively. The
provision for redundant facilities includes management's best estimates of the
total future operating costs of these vacant facilities for the remainder of
their respective lease terms. Actual costs could differ from these estimates.
Other cash costs related primarily to the cancellation of trade shows and
other commitments.
Non-cash costs include impairment losses of $21.6 million related to assets
held for use. The losses are comprised of $16.7 million related to marketing and
distribution rights, $3.1 million related to goodwill, and $1.9 million related
to other capital assets.
In accordance with FAS 121 management reviews the carrying value of
long-lived assets whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. As part of the restructuring of the
Company's operations, management will focus on its core products and traditional
markets. As a result, the carrying value of certain of the Company's long-lived
assets related to, among others, the Eclipse and Proactive acquisitions was
higher than their fair value. Management used the discounted cash flows method
to arrive at the estimated fair value of the assets.
The cash cost of restructuring relating to facilities are payable over a
period of 10 years. All other cash costs of restructuring are payable over the
next two years.
Delrina Obligation
On September 10, 1996, the Company acquired the Delrina Assets from
Delrina, a subsidiary of Symantec Corporation of Cupertino, California. Under
the asset purchase agreement (the "Delrina Asset Purchase Agreement"), the
Company will make quarterly payments to Delrina, from September 27, 1996 to June
27, 2000. During the year ended April 30, 1999, the Company made cash payments
totaling US$34.4 million ($50.8 million) in satisfaction of its obligation to
Delrina.
On February 12, 1998, the Company and Delrina re-negotiated certain terms
of the Delrina asset purchase agreement whereby the Company agreed to accelerate
payment of its obligation in consideration for a reduction in the effective
interest rate, resulting in a reduction in imputed interest charges. In
addition, the amended agreement provided that the Company may issue its Common
Shares to Delrina in satisfaction of a portion of its payment obligations
provided that the total market value of the Company's Common Shares held by
Delrina immediately following such issuance does not exceed US$14 million and
the Company continues to meet certain registration requirements in respect of
such issued Common Shares. The Company believes that Delrina held no Common
Shares of the Company as at April 30, 1999. As at April 30, 1999, the next four
scheduled, quarterly payments totaled US$14.8 million .
Financial Instruments and Credit Facility
The Company has entered into a receivables purchase agreement with the
Royal Bank of Canada ("the Bank"). Under the agreement, the Company has the
option to sell certain accounts receivable on a recourse basis. The Bank has
recourse in the event of a trade dispute as defined in the receivables purchase
agreement and upon the occurrence of other specified events. The maximum amount
of accounts receivable the Company can sell under this agreement is US$20
million or the Canadian dollar equivalent thereof. The Bank is in the process of
reviewing its policies regarding the purchase of accounts receivable with
payment terms exceeding one year. As a result, there can be no assurance that
the Bank will continue to purchase additional term accounts receivable under the
current agreement. As at April 30, 1999, the outstanding balance of accounts
receivable sold under this agreement was approximately US$6.9 million. The
Company believes that none of the receivables sold are at risk of recourse.
The Company has a committed $20 million credit facility with the Royal Bank
of Canada. The credit facility is made up of (i) a $10 million term facility
which bears interest at a rate of 1.5% over the Bankers Acceptance rate of the
Bank from time to time and is payable on June 30, 2000; and (ii) a $10 million
revolving line of credit which bears interest at the prime rate of the Canadian
Bank from time to time. As at April 30, 1999, the Company had drawn down $10
million of the term loan facility and locked in the interest rate until October
18, 1999 at 6.24%. The Company had no borrowings against its revolving line of
credit as at April 30, 1999. The Company has granted as collateral for the $20
million credit facility a general security agreement over JetForm's assets,
including a pledge of the shares of certain subsidiaries.
The Company believes that its existing cash and cash equivalents and its
ability to pay the obligation to Delrina through the issuance of common shares,
will provide sufficient liquidity to meet the Company's business requirements in
the near term. However, should the Company continue to incur operating losses,
its ability to meet its liquidity requirements and to raise additional capital
through debt or equity financing may be compromised.
Recent Accounting Pronouncements
The Company recognizes revenue in accordance with Statement of Position
("SOP") 97-2, "Software Revenue Recognition" issued by the American Institute of
Certified Public Accountants ("AICPA") in October 1997 and amended by SOP 98-4
issued in March 1998. Additionally, SOP 98-9 issued in December 1998 extends
certain provisions of SOP98-4 and amends certain provisions of SOP97-2. SOP 98-9
will be effective for the Company's fiscal year ending April 2000. The Company
is currently studying the impact, if any, of the adoption of SOP 98-9 on its
future results of operations and financial position.
In June 1998, the Financial Accounting Standards Board ("FASB") issued the
Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). This statement
establishes accounting and reporting standards for derivative instruments and
hedging activities and is effective for all fiscal quarters of fiscal years
beginning after June 15, 1999. In June, 1999 the FASB issued SFAS No.137 which
delays the effective date of SFAS 133 until fiscal years beginning after June
15, 2000. Although the impact of SFAS 133 on the Company's financial disclosures
is not known at this time, the Company will adopt SFAS 133 during the year
ending April 30, 2002.
In April, 1998, the AICPA issued SOP 98-5, "Reporting Costs of Start-Up
Activities". This statement establishes accounting and reporting standards for
start-up costs and organization costs. This SOP is effective for fiscal years
beginning after December 15, 1998. The Company will adopt SOP 98-5 in its fiscal
year ending April 30, 2000.
The Year 2000
What is commonly known as the Year 2000 issue arises because many
computerized systems use two digits rather than four to identify a year. Date
sensitive systems may recognize the Year 2000 as 1900 or some other date,
resulting in errors when information using Year 2000 dates is processed. The
effect of the Year 2000 issue may be experienced before, on, or after January 1,
2000, and, if not addressed, the impact on operations and financial reporting
may range from minor errors to significant systems failure which could affect an
entity's ability to conduct normal business operations.
The Company recognizes the need to ensure its operations will not be
adversely impacted by software failures caused by the advent of the Year 2000.
To address the Year 2000 issues, the Company commenced a program which entailed
a comprehensive review of its software products, internal financial and
operational systems, and the Company's suppliers.
The Company has reviewed all its major products and believes that the
majority of the current versions are Year 2000 compliant. Certain products which
are not currently Year 2000 compliant are in the process of being upgraded to
include Year 2000 compliance. The Company has made available information on its
Year 2000 product compliance on its Web site http://www.jetform.com.
With respect to the Company's internal systems, the Company has identified
internal hardware and software systems that could be affected by the Year 2000
date change. The Company is taking preventive measures in those cases where
systems have been found not to be Year 2000 compliant either by replacing those
systems or upgrading to compliant versions offered by suppliers. All costs
associated with modifying the existing internal use computer software will be
expensed as incurred.
The Company is contacting its major suppliers and is not aware of any Year
2000 compliance issues that would impact its normal business operations.
However, there can be no assurance that the systems of its major suppliers and
other service providers on which the Company relies will not be adversely
impacted by software failures caused by the advent of the Year 2000.
The Company expects to implement successfully the systems and programming
changes necessary to address the Year 2000 issues with respect to its products
and internal systems and does not believe that the cost of such actions will
have a material adverse effect on its financial condition or results of
operations. However, the risks from the inability of the Company's software
products or internal systems to properly function in the Year 2000 could result
in increased warranty costs, customer satisfaction issues, inability to ship
products, potential lawsuits, and other costs and liabilities resulting from
business interruptions. To the extent possible, the Company will be developing
contingency plans designed to allow continued operation in the event of failure
of the Company's or third parties' systems.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Company is primarily exposed to market risks associated with
fluctuations in interest rates and foreign currency exchange rates.
Interest rate risks
The Company's exposure to interest rate fluctuations relates primarily to
its investment portfolio and its credit facility with its bank. The Company
primarily invests its cash in short-term high-quality securities with reputable
financial institutions. The interest income from these investments is subject to
interest rate fluctuations which management believes would not have a material
impact on the financial position of the Company.
The Company has a committed $20 million credit facility with the Royal Bank
of Canada. The credit facility is made up of (i) a $10 million term facility
which bears interest at a rate of 1.5% over the Bankers Acceptance rate of the
Bank from time to time and is payable on June 30, 2000; and (ii) a $10 million
revolving line of credit which bears interest at the prime rate of the Canadian
Bank from time to time. As at April 30, 1999, the Company had drawn down $10
million of the term loan facility and locked in the interest rate until October
18, 1999 at 6.24%. The Company had no borrowings against its revolving line of
credit as at April 30, 1999.
The impact on net interest income of a 100 basis point adverse change in
interest rates for the fiscal year ended April 30, 1999 would have been
approximately $570,000.
Foreign Currency Risk
The Company has net monetary asset and liability balances in foreign
currencies other than the Canadian Dollar, including the U.S. Dollar ("US$"),
the Pound Sterling ("GBP"), the Australian dollar ("AUD"), the Swedish Krona
("SEK"), the German Mark ("DM"), the French Franc ("FF"), the Irish Punt
("IEP"), the Euro ("EUR"), and the Japanese Yen ("JPY").
JetForm hedges its U.S. dollar net asset position to reduce its exposure to
currency fluctuations. Gains and losses resulting from these hedges are
recognized in income in the same period as gains and losses on the underlying
position JetForm does not enter into these financial instruments for speculative
or trading purposes. As at April 30, 1999, JetForm had a forward contract
outstanding to sell $5 million U.S. dollars at $1.4549 per Canadian dollar. As
at April 30, 1999, the approximate fair value of this forward contract is nil.
The Company's cash and cash equivalents are primarily held in Canadian and
U.S. dollars. As a result, fluctuations in the exchange rate of the U.S. dollar
will have an impact on the Company's reported cash position. As at April 30,
1999, a 10% adverse change in foreign exchange rates versus the U.S. dollar
would have reduced the Company's reported cash and cash equivalents balance by
approximately $2.0 million. As at April 30, 1999, a 10% adverse change in
foreign exchange rates versus currencies other than the U.S. dollar, held by the
Company, would not have had a material impact on the Company's reported cash and
cash equivalents balance.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
Management's Statement of Responsibility 32
Auditors' Report 33
Consolidated Balance Sheets 34
Consolidated Statements of Operations 35
Consolidated Statements of Comprehensive Income 36
Consolidated Statements of Shareholders' Equity 37
Consolidated Statements of Cash Flows 38
Notes to Consolidated Financial Statements 39
<PAGE>
MANAGEMENT'S STATEMENT OF RESPONSIBILITY
Management is responsible for the preparation of the financial statements
and all other information in the Form 10-K filing with the U.S. Securities and
Exchange Commission. The financial statements have been prepared in accordance
with generally accepted accounting principles and reflect management's best
estimates and judgments. The financial information presented elsewhere in the
annual report is consistent with the consolidated financial statements.
Management has developed and maintains a system of internal controls to
provide reasonable assurance that all assets are safeguarded and to facilitate
the preparation of relevant, reliable and timely financial information.
Consistent with the concept of reasonable assurance, the Company recognizes that
the relative cost of maintaining these controls should not exceed their expected
benefits.
The Audit Committee, which is comprised of independent directors, reviews
the consolidated financial statements, considers the report of the external
auditor, assesses the adequacy of the Company's internal controls, and
recommends to the Board of Directors the independent auditors for appointment by
the shareholders. The financial statements were reviewed by the Audit Committee
and approved by the Board of Directors.
The financial statements were audited by PricewaterhouseCoopers LLP, the
external auditors, in accordance with generally accepted auditing standards on
behalf of the shareholders.
/s/ John B. Kelly /s/ Jeffrey McMullen
- ------------------------------------- --------------------------------------
John B. Kelly Jeffrey McMullen
President and Chief Executive Officer Vice President Finance and Chief
Financial Officer
<PAGE>
AUDITORS' REPORT
TO THE SHAREHOLDERS OF JETFORM CORPORATION
We have audited the consolidated balance sheets of JetForm Corporation as
of April 30, 1999 and 1998, and the consolidated statements of operations,
comprehensive income, shareholders' equity and cash flows for the years ended
April 30, 1999, 1998 and 1997. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in Canada. Those standards require that we plan and perform an audit to
obtain reasonable assurance whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation.
In our opinion, these consolidated financial statements present fairly, in
all material respects, the financial position of the Company as of April 30,
1999 and 1998, and the results of its operations and its cash flows for the
years ended April 30, 1999, 1998 and 1997, in accordance with accounting
principles generally accepted in the United States.
On June 22, 1999, we reported separately to the shareholders of JetForm
Corporation on financial statements for the same period, prepared in accordance
with accounting principles generally accepted in Canada.
PRICEWATERHOUSECOOPERS LLP
Chartered Accountants
Ottawa, Canada
June 22, 1999
<PAGE>
JETFORM CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands of Canadian dollars, except share amounts)
April 30, April 30,
1999 1998
--------- ---------
ASSETS
Current assets
Cash and cash equivalents...................... $ 47,262 $ 91,604
Accounts receivable (Note 2)................... 29,274 31,347
Term accounts receivable (Note 2).............. 13,486 9,993
Unbilled receivables........................... 3,455 6,254
Inventory...................................... 1,139 1,127
Taxes and investment tax credits recoverable... 1,310 443
Prepaid expenses and deferred charges.......... 3,727 3,259
Asset held for sale (Note 18).................. 3,417 --
--------- ---------
103,070 144,027
Term accounts receivable (Note 2).............. 6,090 3,194
Taxes and investment tax credits recoverable... 3,218 2,510
Fixed assets (Note 3).......................... 18,620 17,522
Other assets (Note 4).......................... 25,871 49,314
========= =========
$156,869 $216,567
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable............................... $ 7,874 $ 4,499
Accrued liabilities............................ 15,656 12,868
Unearned revenue............................... 12,463 9,197
Current portion of Delrina obligation
(Note 14).................................... 22,023 47,093
---------- ---------
58,016 73,657
Deferred income taxes (Note 9)................. 164 4,450
Accrued liabilities (Note 15).................. 3,225 --
Term loan (Note 6)............................. 9,998 --
Delrina obligation (Note 14)................... 536 26,311
---------- ---------
71,939 104,418
---------- ---------
Commitments (Note 11)
Shareholders' equity
Capital stock (Issued and outstanding --
19,421,428 Common Shares and 450,448
Preference Shares at April 30, 1999;
17,028,141 Common Shares, 450,448
Preference Shares and 2,200,000 Special
Warrants at April 30, 1998) (Note 7) ........ 247,119 244,151
Cumulative translation adjustment..... (1,052) --
Deficit............................... (161,137) (132,002)
--------- ---------
84,930 112,149
--------- ----------
$156,869 $216,567
========= ==========
(the accompanying notes are an integral part of these
consolidated financial statements)
Signed on behalf of the Board:
/s/ John B. Kelly /s/ Abraham Ostrovsky
- ----------------- ---------------------
<PAGE>
JETFORM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of Canadian dollars except share and per share amounts)
Year ended April 30,
-------------------------------------------
1999 1998 1997
------- -------- --------
Revenues
Product..................... $ 66,662 $ 74,781 $ 54,935
Service..................... 47,550 36,446 21,679
--------- --------- ---------
114,212 111,227 76,614
--------- --------- ---------
Costs and expenses
Cost of product............. 9,164 7,539 4,677
Cost of service............. 19,058 15,259 10,805
Sales and marketing......... 53,315 40,214 29,140
General and
administrative............ 10,722 9,846 8,618
Research and development
(Note 5).................. 15,384 10,620 7,422
Depreciation and
amortization.............. 11,568 11,631 8,190
Provision for restruc-
turing costs (Note 15).... 30,503 -- --
Repurchase of Moore
Options (Note 10)......... -- -- 47,084
In process research and
development (Note 14)..... -- -- 106,962
--------- --------- ---------
149,714 95,109 222,898
--------- --------- ---------
Operating income (loss)..... (35,502) 16,118 (146,284)
Net interest income
(expense)................. 3,826 (3,564) (3,662)
Other income (expense)...... (11) -- 1,659
--------- --------- ---------
Income (loss) before
taxes..................... (31,687) 12,554 (148,287)
Provision for current
taxes (Note 9)............ (2,073) (2,045) (1,097)
Recovery of deferred
taxes (Note 9)............ 4,625 355 904
--------- --------- ---------
Net income (loss)........... $ (29,135) $ 10,864 $ (148,480)
========= ========= =========
Basic income per share
(Note 8)
Net income (loss) per
share..................... $ (1.47) $ 0.65 $ (10.03)
Weighted average number
of shares................. 19,826,057 16,622,835 14,796,852
Fully diluted income per
share (Note 8)
Net income (loss)
per share................. $ (1.47) $ 0.62 $ (10.03)
Weighted average number
of shares................. 19,826,057 17,615,595 14,796,852
(the accompanying notes are an integral part of
these consolidated financial statements)
<PAGE>
JETFORM CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in thousands of Canadian dollars)
Year ended April 30,
-----------------------------------------------
1999 1998 1997
----------- ---------- ------------
Net income................... $ (29,135) $ 10,864 $ (148,480)
Other comprehensive
income (loss):
Cumulative translation
adjustment................ (1,052) -- --
=========== ========== ============
Comprehensive income
(loss).................... $ (30,187) $ 10,864 $ (148,480)
=========== ========== ============
(the accompanying notes are an integral part of
these consolidated financial statements)
<PAGE>
<TABLE>
<CAPTION>
JETFORM CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands of Canadian dollars except share amounts)
Number issued and outstanding Stated Value
---------------------------------------------------------------------------------------------------------------
Total Cumulative Retained Total
Common Special Preference Common Special Preference Capital Translation Earnings Shareholders'
Stock Warrants Stock Stock Warrants Stock Stock Adjustment (Deficit) Equity
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance as at
April 30, 1996 9,237,013 -- 2,263,782 $ 36,596 $ -- $ 24,823 $ 61,419 -- $ 5,614 $ 67,033
Issuance of
Common Shares:
Pursuant to
acquisitions...... 15,665 -- -- 390 -- -- 390 -- -- 390
Pursuant to
repurchase of
Moore Options
(Note 10)......... 1,813,334 -- -- 46,335 -- -- 46,335 -- -- 46,335
Repayment of
Delrina obliga-
tion.............. 662,731 -- -- 17,142 -- -- 17,142 -- -- 17,142
Public offering... 1,500,000 -- -- 30,094 -- -- 30,094 -- -- 30,094
Conversions....... 1,813,334 -- (1,813,334) 19,884 -- (19,884) -- -- -- --
Exercise of stock
options............. 651,546 -- -- 3,575 -- -- 3,575 -- -- 3,575
Net loss for the
year.............. -- -- -- -- -- -- -- -- (148,480) (148,480)
---------------------------------------------------------------------------------------------------------------
Balance as at
April 30,
1997 15,693,623 -- 450,448 154,016 -- 4,939 158,955 -- (142,866) 16,089
Issuance of Common
Shares:
Pursuant to
acquisitions..... 6,918 -- -- 144 -- -- 144 -- -- 144
Repayment of
Delrina
obligation....... 715,654 -- -- 15,485 -- -- 15,485 -- -- 15,485
Exercise of stock
options.......... 611,946 -- -- 5,917 -- -- 5,917 -- -- 5,917
Issuance of Spe-
cial Warrants.... -- 2,200,000 -- -- 63,650 -- 63,650 -- -- 63,650
Net income for
the year......... -- -- -- -- -- -- -- -- 10,864 10,864
---------------------------------------------------------------------------------------------------------------
Balance as at
April 30, 1998 17,028,141 2,200,000 450,448 175,562 63,650 4,939 244,151 -- (132,002) 112,149
Issuance of
Common Shares:
Pursuant to
acquisitions..... 6,918 -- -- 242 -- -- 242 -- -- 242
Share purchase
plan............. 20,768 -- -- 375 -- -- 375 -- -- 375
Exercise of
stock options.... 165,601 -- -- 2,259 -- -- 2,259 -- -- 2,259
Conversions of
Special
Warrants......... 2,200,000 (2,200,000) -- 63,742 (63,650) -- 92 -- -- 92
Cumulative
translation
adjustment....... -- -- -- -- -- -- -- (1,052) -- (1,052)
Net Loss for the
year............. -- -- -- -- -- -- -- -- (29,135) (29,135)
---------------------------------------------------------------------------------------------------------------
Balance as at
April 30,
1999 19,421,428 -- 450,448 $ 242,180 -- $ 4,939 $ 247,119 $(1,052) $(161,137) $ 84,930
===============================================================================================================
(the accompanying notes are an integral part of these consolidated financial statements)
</TABLE>
<PAGE>
JETFORM CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of Canadian dollars)
Year ended April 30,
--------------------------------------
1999 1998 1997
---------- -------- ----------
Cash provided from (used in):
Operating activities
Net income (loss)................. $(29,135) $ 10,864 $(148,480)
Items not involving cash:
Depreciation and
amortization.................. 14,838 13,629 8,605
Deferred income taxes........... (4,625) (355) (904)
Other non-cash items............ (4,130) 4,034 3,812
Provision for restructuring
costs (Note 15)................. 21,611 -- --
Repurchase of Moore Options....... -- -- 46,335
In process research and
development..................... -- -- 106,962
Net change in operating
components of working
capital (Note 12)............... 9,082 (6,869) (14,287)
---------- --------- ----------
7,641 21,303 2,043
---------- --------- ----------
Investing activities
Non-cash assets acquired on
purchase of subsidiaries........ -- -- (725)
Purchase of fixed assets.......... (8,316) (8,401) (7,299)
Increase in other assets.......... (5,788) (8,652) (7,463)
---------- --------- ----------
(14,104) (17,053) (15,487)
---------- --------- ----------
Financing activities
Proceeds from issuance of shares... 2,968 69,567 33,669
Issuance of debt................... 9,998 -- --
Repayment of Delrina obligation.... (50,845) (16,663) (5,973)
---------- --------- ----------
(37,879) 52,904 27,696
---------- --------- ----------
Increase (decrease) in cash and
cash equivalents................. (44,342) 57,154 14,252
Cash and cash equivalents,
beginning of year................ 91,604 34,450 20,198
---------- --------- ----------
Cash and cash equivalents, end
of year.......................... $ 47,262 $ 91,604 $ 34,450
========== ========= ==========
(the accompanying notes are an integral part of
these consolidated financial statements)
<PAGE>
JETFORM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation
These consolidated financial statements have been prepared by management in
accordance with accounting principles generally accepted in the United States
("U.S. GAAP"), and include all assets, liabilities, revenues and expenses of
JetForm Corporation ("JetForm") and its wholly-owned subsidiaries: JetForm
Corporation (a Delaware corporation), JetForm Pacific Pty Limited ("JetForm
Pacific"), JetForm Scandinavia AB ("JetForm Nordic"), JetForm France SA
("JetForm France"), JetForm UK Limited ("JetForm UK"), JetForm Deutschland GmbH
("JetForm Germany"), JetForm Technologies Limited ("JetForm Ireland"), JetForm
Japan K.K. ("JetForm Japan"), and Why Interactive Inc. ("Why Interactive").
JetForm and its wholly-owned subsidiaries are collectively referred to herein as
the "Company".
(b) Nature of operations
The Company develops Web-based software solutions that automate business
processes, transforming them into e-processes. Organizations use the Company's
technology to replace existing pre-printed form processes with electronic
forms-based solutions.
The Company sells its products and services internationally through
multiple channels which include direct sales to end users, joint marketing
alliances with resellers including value-added resellers ("VARs"), system
integrators, hardware and software vendors ("OEMs") and arrangements with
distributors which resell products primarily to dealers and other retailers.
(c) Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.
(d) Revenue recognition
The Company records revenue in accordance with the Statement of Position
("SOP") 97-2 "Software Revenue Recognition" and SOP 98-4 "Deferral of the
Effective Date of a Provision of SOP 97-2" which provide guidance on applying
generally accepted accounting principles in recognizing revenue from software
transactions.
The Company records product revenue from packaged software and irrevocable
commitments to purchase products when persuasive evidence of an arrangement
exists, the software product has been shipped, there are no significant
uncertainties surrounding product acceptance, the fees are fixed and
determinable, and collection is considered probable. Revenues from irrevocable
commitments to purchase products with payment terms exceeding the Company's
customary trade terms are recorded at the amount receivable less deemed
interest. The Company amortizes the difference between the face value of the
receivable and the discounted amount over the term of the receivable and records
the discount as interest income.
Revenue from software product licenses which include significant
customization and revenue from services are recognized on a percentage of
completion basis, whereby revenue is recorded at the estimated realizable value
of work completed to date. Estimated losses on contracts are recognized when
they become probable. Unbilled receivables represent consulting work performed
under contract and not yet billed.
Revenue from maintenance agreements is recognized ratably over the term of
the agreement. Unearned revenue represents payments received from customers for
services not yet performed.
(e) Investment tax credits
Investment tax credits ("ITCs"), which are earned as a result of qualifying
research and development expenditures, are recognized when the expenditures are
made and their realization is reasonably assured, and are applied to reduce
research and development expense in the year.
<PAGE>
(f) Capital assets
Capital assets are recorded at cost. Depreciation and amortization are
calculated using the following rates and bases.
Computer equipment.............. 30% declining balance and straight line
over 2 to 4 years
Software........................ 30% declining balance
Furniture and fixtures.......... 20% declining balance
Software licenses and pur-
chased rights to improve,
market and/or distribute
products...................... Straight-line over the lesser of the life
of the license or right and 15 years
Leasehold improvements......... Straight-line over the term of the lease
Delrina technology............. Straight-line over 3 to 5 years
Trademarks, trade names and
workforce and other assets.... Straight-line or declining balance over
the useful life of the assets which
range from 3 to 15 years
The carrying value of capital assets is periodically reviewed by
management, and impairment losses, if any, are recognized when the expected
non-discounted future operating cash flows derived from the capital asset is
less than the carrying value of such asset. In the event of an impairment in
capital assets, the discounted cash flows method is used to arrive at the
estimated fair value of such asset.
(g) Goodwill
Goodwill, which represents the purchase price paid for an acquired business
in excess of the values assigned to identifiable assets, is amortized on a
straight-line basis over its expected useful life. In general, goodwill is
expected to have a useful life of seven years.
The carrying value of goodwill is periodically reviewed by management, and
impairment losses, if any, are recognized when the expected non-discounted
future operating cash flows derived from the related business acquired are less
than the carrying value of such goodwill. In the event of an impairment in
goodwill, the discounted cash flows method is used to arrive at the estimated
fair value of such goodwill.
(h) Software and software development costs
Computer software purchased by the Company is recorded as fixed assets when
acquired. Costs related to the development of proprietary software are expensed
as incurred unless the costs relate to technically feasible and complete
products and can reasonably be regarded as assured of recovery through future
revenues in which case the costs are deferred and amortized on a straight-line
basis over the useful life of the product, which generally does not exceed three
years.
(i) Foreign currency translation
During the year ended April 30, 1999 the Company adopted the local currency
of its subsidiaries as the functional currency of those subsidiaries. The change
in functional currency resulted from a change in circumstance and has been
applied prospectively. The financial statements of the parent company and its
subsidiaries have been translated into Canadian dollars in accordance with
Statement of Financial Accounting Standards("SFAS") No. 52 "Foreign Currency
Translation". All balance sheet amounts with the exception of Shareholders'
Equity have been translated using the exchange rates in effect at year end.
Income statement amounts have been translated using the average exchange rate
for the year. The gains and losses resulting from the translation of foreign
currency statements into the Canadian dollar are reported in comprehensive
income and as a separate component of Shareholders' Equity.
(j) Cash equivalents and marketable securities
Cash equivalents are defined as liquid investments which have a term to
maturity at the time of purchase of less than ninety days.
(k) Stock based compensation
The Company has elected to continue to follow Accounting Principles Board
Opinion No. 25 "Accounting for Stock Issued to Employees" ("APB 25"), and to
present the pro forma information that is required by SFAS No. 123 --
"Accounting for Stock Based Compensation" ("SFAS 123").
(l) Derivative financial instruments
Gains and losses on forward exchange contracts that hedge exposure to
foreign currency fluctuations are recognized and included in income as realized.
Realized gains and losses on foreign exchange contracts are recognized and
offset against foreign exchange gains and losses on the underlying net asset or
net liability position.
2. ACCOUNTS RECEIVABLE
Accounts receivable and term accounts receivable are net of an allowance
for doubtful accounts of $1.9 million at April 30, 1999 and $1.4 million at
April 30, 1998.
The Company records revenues from irrevocable commitments to purchase
products which do not conform to the Company's customary trade terms at the
minimum amount receivable less deemed interest ("Term Accounts Receivable"). The
Company uses a discount rate equal to its current net cost of borrowing at the
time the revenue is recorded. For the year ended April 30, 1999, the average
discount rate used was 4.5%. Under an irrevocable commitment to purchase product
the customer commits to pay a minimum amount over a specified period of time in
return for the right to use or resell up to a specific number of copies of a
delivered product.
The Company records Term Accounts Receivable as non current to the extent
that management estimates payment will be received more than one year from the
balance sheet date. Payment of Term Accounts Receivable is generally due the
earlier of: (i) delivery of the Company's products by the customer to its
customers or end users; and (ii) specific dates in the license agreement
("Minimum Payment Dates"). As at April 30, 1999, total Term Accounts Receivable
with Minimum Payment Dates exceeding one year were approximately $6.1 million.
As at April 30, 1998, total Term Accounts Receivable with Minimum Payment Dates
exceeding one year were approximately $5.4 million of which management estimated
approximately $2.2 million would be received within one year.
The Company's customer base consists of large numbers of geographically
diverse customers dispersed across many industries. As a result, concentration
of credit risk with respect to trade receivables is not significant.
3. FIXED ASSETS
April 30, 1999 April 30, 1998
-------------------------------------- --------------
Accumulated
depreciation
and Net book Net book
Cost amortization value value
------- ------------ -------- --------------
(in thousands of Canadian dollars)
Computer equipment.... $15,051 $ 8,030 $ 7,021 $ 6,878
Furniture and
fixtures............ 8,410 2,961 5,449 4,508
Software.............. 7,916 4,065 3,851 4,340
Leasehold
improvements........ 3,270 971 2,299 1,796
------- ------------ -------- --------------
$34,647 $16,027 $18,620 $17,522
======= ============ ======== ==============
The cost of fixed assets at April 30, 1998, was $28.8 million, and
accumulated depreciation and amortization was $11.3 million.
4. OTHER ASSETS
April 30, 1999 April 30, 1998
-------------------------------------- --------------
Accumulated Net book Net book
Cost amortization value value
------- ------------ -------- --------------
(in thousands of Canadian dollars)
Delrina technology,
trademarks, trade
names and work- $16,081 $ 7,510 $ 8,571 $10,682
force...............
Goodwill.............. 1,159 226 933 4,794
Licenses, marketing
and distribution
rights.............. 8,482 3,244 5,238 21,746
Deferred and
acquired devel-
opment costs........ 11,125 4,784 6,341 5,376
Other assets.......... 6,624 1,836 4,788 6,716
------- ------------ -------- --------------
$43,471 $17,600 $25,871 $49,314
======= ============ ======== ==============
The cost of other assets at April 30, 1998, was $66.4 million and
accumulated amortization was $17.1 million.
5. RESEARCH AND DEVELOPMENT EXPENSE
The following table provides a summary of development costs deferred and
the related amortization charged to cost of product in the years ended April 30,
1999, 1998 and 1997.
Year ended April 30,
-----------------------------------
1999 1998 1997
------- ------- -------
(in thousands of Canadian dollars)
Research and development costs net of
investment tax credits.................... $18,984 $13,395 $ 9,972
Deferred development costs.................. (3,600) (2,775) (2,550)
-------- -------- --------
Net research and development expense........ $15,384 $10,620 $ 7,422
======== ======== ========
Amortization of development costs
charged to cost of product................ $ 2,636 $ 1,726 $ 342
======== ======== ========
6. FINANCIAL INSTRUMENTS AND CREDIT FACILITIES
The Company has entered into a receivables purchase agreement with the
Royal Bank of Canada ("the Bank"). Under the agreement, the Company has the
option to sell certain accounts receivable on a recourse basis. The Bank has
recourse in the event of a trade dispute as defined in the receivables purchase
agreement and upon the occurrence of other specified events. The maximum amount
of accounts receivable the Company can sell under this agreement is US$20
million or the Canadian dollar equivalent thereof. The Bank is in the process of
reviewing its policies regarding the purchase of accounts receivable with
payment terms exceeding one year. As a result, there can be no assurance that
the Bank will continue to purchase additional term accounts receivable under the
current agreement. As at April 30, 1999, the outstanding balance of accounts
receivable sold under this agreement was approximately US$6.9 million. The
Company believes that none of the receivables sold are at risk of recourse.
The Company has a committed $20 million credit facility with the Royal Bank
of Canada. The credit facility is made up of (i) a $10 million term facility
which bears interest at a rate of 1.5% over the bankers acceptance rate of the
Bank from time to time and is payable on June 30, 2000; and (ii) a $10 million
revolving line of credit which bears interest at the prime rate of the Canadian
Bank from time to time. As at April 30, 1999, the Company had drawn down the $10
million term loan facility and fixed the interest rate until October 18, 1999 at
6.24%. The Company had no borrowings against its revolving line of credit as at
April 30, 1999. The Company has granted as collateral for the $20 million credit
facility a general security agreement over JetForm's assets, including a pledge
of the shares of certain subsidiaries.
JetForm hedges its U.S. dollar net asset position to reduce its exposure to
currency fluctuations. To achieve this objective, JetForm primarily enters into
foreign exchange forward contracts with major Canadian chartered banks, and
therefore, does not anticipate non-performance by these counterparties. JetForm
does not enter into foreign exchange forward contracts for speculative or
trading purposes. As at April 30, 1999, JetForm had a foreign exchange forward
contract outstanding to sell $5 million U.S. dollars at $1.4549 per Canadian
dollar. As at April 30, 1999, the approximate fair value of this forward
contract is nil.
7. CAPITAL STOCK
The authorized capital stock of the Company consists of an unlimited number
of Common Shares ("Common Shares") and 2,263,782 Convertible Preference Shares
("Preference Shares").
On June 27, 1996, the Company completed an agreement with Moore Corporation
Limited ("Moore") under which a subsidiary of the Company repurchased certain
options previously issued to Moore for consideration of US$34.0 million ($46.3
million), paid through the issuance by the Company to Moore of 1,813,334 Common
Shares. Moore subsequently sold to various third parties 1,813,334 previously
issued Preference Shares which were converted into an equal number of Common
Shares, and Moore exercised certain other options to acquire 178,750 Common
Shares at US$8.25 per share. As a result of the foregoing, as at April 30, 1999,
Moore held 1,992,084 Common Shares, 450,448 Preference Shares and 116,216
options.
During the year ended April 30, 1997, the Company issued 1,500,000 Common
Shares, at a price of US$16.25 per share, to third parties pursuant to an
underwritten public offering. The net proceeds from the offering after deducting
underwriting discounts, fees and expenses were $30.1 million.
During the year ended April 30, 1998, the Company issued 2,200,000 special
warrants ("Special Warrants") to Canadian investors at a price of US$21.25 per
Special Warrant. The net proceeds from the offering after deducting underwriting
discounts, fees and expenses were $63.7 million. The Special Warrants were
deemed to have been exercised by the holders thereof on June 26, 1998, without
payment of additional consideration on the basis of one Common Share for each
Special Warrant so held. On June 19, 1998, the Company filed a final prospectus
with Canadian securities regulators to register the 2,200,000 Common Shares
issuable on exercise of the Special Warrants. The Company does not intend to
register such Common Shares under the United States Securities Act of 1933.
In June 1990, the Company adopted an Employee Stock Option Plan (the "1990
Plan") pursuant to which 400,000 Common Shares were reserved for the grant of
options. On March 4, 1993, the Board of Directors voted to terminate the 1990
Plan effective as of the consummation of the Company's initial public offering
dated April 20, 1993, at which time the 1993 Employee Stock Option Plan (the
"1993 Plan") became effective.
On March 4, 1993, the Board of Directors adopted the 1993 Plan. The 1993
Plan is administered by the Compensation Committee of the Board of Directors and
options are not granted at less than the fair market value of the Common Shares
on the date of grant. Options outstanding under the 1993 Plan remain in effect
pursuant to their terms. Options granted under the 1993 Plan have a term of five
years and vest at the rate of one-third of the shares covered on each of the
first three anniversary dates of the date of grant. Options granted under the
1993 Plan are not transferable and are exercisable only by the optionee during
the optionee's lifetime.
The Company established the 1995 Plan on June 28, 1995, to replace the 1993
Plan. The 1995 Plan is administered by the Compensation Committee of the Board
of Directors and provides for the grant to all eligible full-time employees,
directors, officers and others of options to purchase Common Shares at a price
based upon the last trading price of the Common Shares on the NASDAQ National
Market on the trading day immediately preceding the date of grant. Pursuant to
the 1995 Plan, the aggregate number of Common Shares available to be issued is
4,425,763. Options granted under the 1995 Plan have a term of four, five or
seven years and vest ratably during the first three years following grant.
Options granted are non-transferable.
On September 11, 1997, the Shareholders of the Company approved the 1997
Employee Stock Purchase Plan (the "Stock Purchase Plan"). A total of 400,000
Common Shares of the Company have been reserved for issuance pursuant to the
Stock Purchase Plan. Shares may be purchased under the Stock Purchase Plan by
employees through payroll deduction. The purchase price of Common Shares issued
under the Stock Purchase Plan is the lower of 95% of the fair market of the
Common Shares of the Company at the beginning of the offering period and 95% of
the fair market value of the Common Shares of the Company at the end of the
offering period.
<PAGE>
The following table presents the number of options and warrants outstanding
and exercisable, and the weighted average exercise price:
<TABLE>
<CAPTION>
Weighted
average
Other exercise
IPO options price
Underwriter's and in U.S.
1995 Plan 1993 Plan 1990 Plan warrants Moore warrants Total dollars
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Number of outstanding
options and warrants
Balance at April 30,
1996................... 516,860 928,455 213,341 97,955 8,021,341 286,127 10,064,079 13.50
Grants................... 719,071 -- -- -- -- -- 719,071 18.85
Repurchase of Moore
Options................ -- -- -- -- (7,726,375) -- (7,726,375) 15.00
Cancellations and
forfeitures............ (73,705) (21,979) -- -- -- (8,408) (104,092) 14.83
Exercises................ (10,172) (125,337) (129,091) (20,477) (178,750) (187,719) (651,546) 4.34
---------- --------- --------- -------- ----------- --------- ----------
Balance at April 30,
1997................... 1,152,054 781,139 84,250 77,478 116,216 90,000 2,301,137 12.70
Grants................... 2,048,905 -- -- -- -- 5,000 2,053,905 13.39
Cancellations and
forfeitures............ (164,557) (31,830) -- -- -- (2,219) (198,606) 15.25
Exercises................ (60,261) (342,176) (84,250) (77,478) -- (47,781) (611,946) 6.95
---------- --------- --------- -------- ----------- --------- ----------
Balance at April 30,
1998................... 2,976,141 407,133 -- -- 116,216 45,000 3,544,490 13.95
Grants................... 1,037,960 63,550 -- -- -- -- 1,101,510 4.50
Cancellations and
forfeitures............ (360,813) (175,059) -- -- -- -- (535,872) 12.49
Exercises................ (47,485) (98,116) -- -- -- (20,000) (165,601) 9.38
---------- --------- --------- -------- ----------- --------- ----------
Balance at April 30,
1999................... 3,605,803 197,508 -- -- 116,216 25,000 3,944,527 11.71
========== ========= ========= ======== =========== ========= ==========
Weighted average
exercise price at
April 30, 1998,
in U.S. dollars......... $14.73 $7.70 N/A N/A $16.50 $11.54 $13.95
========== ========= ========= ======== =========== ========= ==========
Weighted average
exercise price at
April 30, 1999,
in U.S. dollars......... $11.78 $ 6.93 N/A N/A $16.50 $15.98 $11.71
========== ========= ========= ======== =========== ========= ==========
Number of exercisable
options and warrants
April 30, 1997............ 183,557 608,275 84,250 77,478 38,739 70,001 1,062,300 8.50
April 30, 1998............ 509,854 397,974 -- -- 77,478 38,334 1,023,640 12.88
April 30, 1999............ 1,397,776 180,759 -- -- 116,216 25,000 1,719,751 14.44
Range of exercise prices
in U.S. dollars at
April 30, 1999
From....................... $ 3.81 $ 3.81 N/A N/A $16.50 $15.25 $ 3.81
To......................... $22.00 $16.00 N/A N/A $16.50 $18.88 $22.00
Range of expiry dates at
April 30, 1999
From....................... March 3, May 9, N/A N/A Mar. 31, April 24, May 9,
2000 1999 2001 2000 1999
To......................... Dec. 1, June 28, N/A N/A Mar. 31, Oct. 24, Dec. 1,
2004 2000 2001 2001 2004
========== ========= ========= ======== =========== ========= ==========
</TABLE>
<PAGE>
JETFORM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
The following table presents the exercise prices and average remaining life
of the outstanding options as at April 30, 1999.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
Range of exercise prices Options outstanding Options exercisable
-------------------------- ------------------------------------------------- -------------------------------
Weighted
average Weighted Weighted
exercise average average
From To Number price remaining life Number exercise price
----------- ------------ ------------- -------------- --------------- ------------- ---------------
(U.S. dollars) (U.S. (Years) (U.S. dollars)
dollars)
<S> <C> <C> <C> <C> <C> <C>
$ 3.81 $ 3.81 1,031,530 $ 3.81 3.75 63,550 $ 3.84
3.94 13.00 268,660 10.21 2.30 151,447 9.29
13.25 13.25 521,542 13.25 3.09 197,330 13.25
13.37 13.37 1,046,733 13.37 3.84 454,363 13.37
13.50 16.50 521,362 15.53 2.82 479,844 15.55
16.81 19.00 527,560 18.77 4.22 361,831 18.78
19.38 22.00 27,140 20.63 4.15 11,386 19.96
============= =============
3,944,527 11.71 3.53 1,719,751 14.44
============= =============
</TABLE>
Options and warrants outstanding at April 30, 1999, had a weighted average
remaining contractual life of approximately 3.06 years. The exercise price of
all options granted during the years ended April 30, 1999, 1998 and 1997 was
equal to the fair market value of the underlying shares at the date of grant. No
compensation expense has been recorded in the Consolidated Statements of
Operations for stock based compensation.
The following table presents net income and earnings per share for the
periods presented on a pro forma basis after recording the pro forma
compensation expense relating to stock options granted to employees, in
accordance with SFAS 123:
Year ended April 30,
------------------------------------
1999 1998 1997
------------------------------------
(in thousands of Canadian dollars,
except per share amounts)
Net income (loss) reported............... $(29,135) $10,864 $(148,480)
Pro forma compensation expense........... (6,770) (5,430) (3,704)
--------- -------- ----------
Pro forma net income (loss).............. $(35,905) $ 5,434 $(152,184)
========= ======== ==========
Pro forma basic income (loss) per
share.................................. $ (1.81) $ 0.33 $ (10.28)
========= ======== ==========
Pro forma fully diluted income (loss)
per share.............................. $ (1.81) $ 0.31 $ (10.28)
========= ======== ==========
SFAS 123 requires that pro forma compensation expense be recognized over
the vesting period, based on the fair value of options granted to employees. The
pro forma compensation expense presented above has been estimated using the
Black Scholes option pricing model. Assumptions used in the pricing model
include: (i) risk free interest rates for the periods of between 4.8% and 6.25%;
(ii) expected volatility of 40% for the year ended April 30, 1999; 35% for the
year ended April 30, 1998; and 60% for the year ended April 30, 1997; (iii)
expected dividend yield of nil; and (iv) an estimated average life of three to
four years.
SFAS 123 requires that pro forma compensation expense be reported for
options granted in fiscal years beginning after December 15, 1994, which in the
case of the Company was the year ended April 30, 1996. Since the compensation
expense is recognized over the vesting period, the pro forma compensation
expense presented above is not necessarily indicative of the pro forma
compensation expense that will be reported in future periods if the Company
continues to grant options.
8. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, "Earnings Per Share", which was required to be adopted on December
31, 1997. As a result, the Company has changed the method used to compute income
per share and has restated all prior periods.
The Common Shares and Preference Shares represent equivalent residual
interests and have been included in the computation of weighted average number
of shares outstanding for purposes of the earnings per share computation.
The reconciliation of the numerator and denominator for the calculation of
net income per share and diluted net income per share is as follows:
Year ended April 30,
-----------------------------------------
1999 1998 1997
-----------------------------------------
(in thousands of Canadian dollars
except share and per share amount)
Net Income per Share
Net income....................... $ (29,135) $ 10,864 $ (148,480)
============ =========== ============
Weighted average number of
shares outstanding............... 19,826,057 16,622,835 14,796,852
============ =========== ============
Net income per share............. $ (1.47) $ 0.65 $ (10.03)
============ =========== ============
Diluted Net Income per Share
Net income....................... $ (29,135) $ 10,864 $ (148,480)
============ =========== ============
Weighted average number of
shares outstanding............... 19,826,057 16,622,835 14,796,852
Dilutive effect of stock
options*......................... -- 992,760 --
------------ ----------- ------------
Adjusted weighted average number
of shares outstanding............ 19,826,057 17,615,595 14,796,852
============ =========== ============
Diluted net income per share..... $ (1.47) $ 0.62 $ (10.03)
============ =========== ============
* All anti-dilutive options have been excluded
9. INCOME TAXES
The Company operates in several tax jurisdictions. Its income is subject to
varying rates of tax, and losses incurred in one jurisdiction cannot be used to
offset income taxes payable in another. A reconciliation of the combined
Canadian federal and provincial income tax rate with the Company's effective
income tax rate is as follows:
Year ended April 30,
-----------------------------------------
1999 1998 1997
-----------------------------------------
(in thousands of Canadian dollars)
Expected statutory rate
(recovery)....................... (44%) 44% (44%)
Expected provision for (recov-
ery of) income tax............... $(14,134) $ 5,600 $(65,777)
Effect of foreign tax rate
differences...................... 2,816 (313) (319)
Benefit of losses not recognized... 1,567 117 8,472
Realized benefit of prior years'
losses and SR&ED carry
forwards......................... (1,120) (3,350) (385)
Repurchase of Moore Options........ -- -- 20,860
Temporary differences for which
no tax benefit was recognized.... 12,557 59 37,103
Temporary differences for which
no accounting benefit was
recognized....................... (6,120) (649) --
Non deductible restructuring
costs.......................... 1,372 -- --
Other items........................ 510 226 239
============ =========== ============
Provision for income taxes......... $ (2,552) $ 1,690 $ 193
============ =========== ============
<PAGE>
The primary temporary differences which gave rise to deferred taxes at
April 30, 1999 and 1998 are:
Year ended April 30,
-------------------------------
1999 1998
------------- ------------
(in thousands of Canadian
dollars)
Deferred tax assets:
Scientific research and experimental
development expenditures.................... $ 3,195 $ 1,589
Net operating loss carryforwards.............. 18,670 17,776
Depreciation and amortization................. 470 --
Provision for restructuring costs............. 3,331 --
In process research and development........... 31,147 31,147
------------- ------------
56,813 50,512
Less, valuation allowance..................... (49,153) (43,895)
------------- ------------
7,660 6,617
------------- ------------
Deferred tax liabilities:
Investment tax credits........................ 1,574 923
Depreciation and amortization................. 6,086 5,694
Marketing and distribution rights............. 164 4,450
------------- ------------
7,824 11,067
============= ============
Net deferred tax liability.................... $ 164 $ 4,450
============= ============
The valuation allowance for deferred taxes is required due to the Company's
operating history and management's assessment of various uncertainties related
to their future realization. Since the realization of deferred tax assets is
dependent upon generating sufficient taxable income in the tax jurisdictions
which gave rise to the deferred tax asset, the amount of the valuation allowance
for deferred taxes may be reduced if it is demonstrated that positive taxable
income in the various tax jurisdictions is sustainable.
10. RELATIONSHIP WITH MOORE CORPORATION LIMITED
The Company concluded an investment agreement with Moore in August 1994
under which Moore acquired 2,263,782 convertible preference shares, an option to
purchase an additional 178,750 Common Shares of the Company, and a conditional
option to acquire 7,726,375 Common Shares of the Company no later than December
30, 1999 subject to certain anti-dilution provisions (the "Moore Options"). In
accordance with these anti-dilution rights, during the year ended April 30,
1996, Moore also acquired an option to acquire 116,216 Common Shares of the
Company.
On June 27, 1996, the Company entered into an agreement with Moore under
which a subsidiary of the Company repurchased the Moore Options for
consideration of US$34.0 million ($46.3 million), paid for through the issuance
by the Company to Moore of 1,813,334 Common Shares and incurred additional
expenses associated with the transaction of $749,000. The consideration paid for
the options was determined by arm's length negotiation between the parties.
During the year ended April 30, 1998, the Company reexamined its
relationship with Moore and determined that Moore did not have a significant
influence over the management and operating policies of the Company.
Accordingly, transactions and balances with Moore for the year ended April 30,
1998 and subsequent years are not disclosed as related party transactions. For
the year ended April 30, 1997 revenues from Moore were $5.8 million.
11. COMMITMENTS
As at April 30, 1999, the Company was committed under certain operating
leases for rental of office premises and equipment as follows:
Years ending April 30, 2000 $5,554,000
2001 $4,934,000
2002 $5,671,000
2003 $5,448,000
2004 and beyond $21,827,000
Total rent expense for the years ended April 30, 1999, 1998 and 1997 was
$5.9 million, $3.6 million and $2.4 million respectively.
<PAGE>
12. NET CHANGE IN OPERATING COMPONENTS OF WORKING CAPITAL
The net change in operating components of working capital is comprised of:
Year ended April 30,
-----------------------------------------
1999 1998 1997
-----------------------------------------
(in thousands of Canadian dollars)
Decrease (increase) in:
Accounts receivable and term
accounts receivable............ $(4,316) $(8,582) $(12,895)
Unbilled receivables............. 2,799 (3,902) (1,177)
Inventory........................ (12) (49) (466)
Prepaid expenses and deferred
charges........................ (468) 404 (1,710)
Taxes and investment tax credits
recoverable.................... (1,575) (728) 198
Increase (decrease) in:
Accounts payable................. 3,375 (254) (71)
Accrued liabilities.............. 6,013 4,041 (1,742)
Unearned revenue................. 3,266 2,201 3,576
-------- -------- ---------
$9,082 $(6,869) $(14,287)
======== ======== ==========
<PAGE>
13. SEGMENTED INFORMATION
In June 1997, FASB issued SFAS No. 131 "Disclosures about Segments of an
Enterprise and Related Information" that was effective for fiscal years
beginning after December 15, 1997. The Company adopted this new Statement in
fiscal year 1999 and has restated all prior periods.
Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by the
Company's chief decision maker in deciding how to allocate resources and
assessing performance. The Company's chief decision maker is the Chief Executive
Officer.
The Company's reportable segments include Product, Consulting and Customer
Support. The Product segment engages in business activities from which it earns
license revenues from the Company's E-Process software products. The Consulting
segment earns revenues from assisting customers in configuring, implementing and
integrating the Company's products and when required, customizing products and
designing automated processes to meet the customer's specific business needs as
well as providing all necessary training. The Customer Support segment earns
revenues through after sale support for software products as well as providing
software upgrades under the Company's maintenance and support programs.
The accounting policies of the Company's operating segments are the same as
those described in Note 1. The Company evaluates performance based on the
contribution of each segment The Product segment costs include all costs
associated with selling product licenses, consulting services, and customer
support. The costs of the Consulting and Customer Support segments include all
costs associated with the delivery of the service to the customer. Inter-segment
revenues as well as charges such as depreciation and amortization, interest
expense, and overhead allocation are not included in the calculation of segment
profit. The Company does not use a measure of segment assets to assess
performance or allocate resources. As a result, segment asset information is not
presented.
Year ended April 30, 1999
--------------------------------------------------------
Customer
Product Consulting Support Total
------------ -------------- ------------ --------------
Revenues $ 66,662 $ 25,612 $ 21,938 $114,212
Costs 43,756 8,843 3,904 56,503
--------------------------------------------------------
Contribution $ 22,906 $ 16,769 $ 18,034 57,709
==========================================
Research and development (15,384)
Other expenses (43,509)
Provisions for restructuring costs (30,503)
Recovery of income taxes 2,552
--------------
Net Loss $(29,135)
==============
<PAGE>
Year ended April 30, 1998
--------------------------------------------------------
Customer
Product Consulting Support Total
------------ -------------- ------------ ---------------
Revenues $ 74,781 $ 18,959 $ 17,487 $111,227
Costs 38,974 6,947 1,874 47,795
--------------------------------------------------------
Contribution $ 35,807 $ 12,012 $ 15,613 63,432
==========================================
Research and development (10,620)
Other expenses (40,258)
Provision for income taxes (1,690)
--------------
Net income $ 10,864
==============
Year ended April 30, 1997
--------------------------------------------------------
Customer
Product Consulting Support Total
------------ -------------- ------------ ---------------
Revenues $ 54,935 $ 12,442 $ 9,237 $ 76,614
Costs 25,186 6,407 1,602 33,195
--------------------------------------------------------
Contribution $ 29,749 $ 6,035 $ 7,635 43,419
=========== =============
Research and development (7,422)
Other expenses (30,238)
Repurchase of Moore Option (47,084)
In process research and development (106,962)
Provision for income taxes (193)
--------------
Net Loss $ (148,480)
==============
The following table details the revenue and assets attributable to Canada
(the Company's country of domicile), the United States and all other foreign
jurisdictions. The Company attributes revenue to geographic areas based on the
location of the customer to which the products or services were sold.
Year ended April 30,
-------------------------------------------------------
1999 1998 1997
------------------ ----------------- -----------------
Revenue Assets Revenue Assets Revenue Assets
(in thousands of Canadian dollars)
Canada $ 6,584 $35,110 $ 15,637 $41,815 $ 9,418 $38,192
United States 72,616 3,299 65,915 4,343 44,764 3,930
Other 35,012 6,082 29,675 20,678 22,432 21,146
-------- ------- -------- ------- ------- -------
$114,212 $44,491 $111,227 $66,836 $76,614 $63,268
======== ======= ======== ======= ======= =======
14. DELRINA ASSETS
On September 10, 1996, the Company acquired certain assets, including title
to intellectual property, related to the forms software group (the "Delrina
Assets") of Delrina Corporation ("Delrina"), a subsidiary of Symantec
Corporation of Cupertino, California, USA.
Under the asset purchase agreement, the Company will make unequal quarterly
payments to Delrina, from September 27, 1996 to June 27, 2000. This is a
non-interest bearing obligation which was originally valued using a discount
rate of 6%. The current estimated fair value of the Delrina obligation is
approximately the same as that recorded in these consolidated financial
statements.
On February 12, 1998, the Company and Delrina re-negotiated certain terms
of the Delrina Asset Purchase Agreement whereby the Company agreed to accelerate
payment of its obligation in consideration for a reduction in the effective
interest rate, resulting in a reduction in imputed interest charges. In
addition, the amended agreement provided that the Company may issue its Common
Shares to Delrina in satisfaction of a portion of its payment obligations
provided that: (i) the total market value of the Company's Common Shares held by
Delrina immediately following such issuance does not exceed US$14.0 million; and
(ii) the Company continues to meet certain registration requirements in respect
of such issued Common Shares. As at April 30, 1999, the Company believes that
Delrina held no Common Shares of the Company.
<PAGE>
The consideration paid and the net assets acquired were as follows:
(in thousands
of Canadian dollars)
Assets acquired:
Tangible assets............................................ $ 460
Trademarks, trade names and workforce...................... 6,949
Technology................................................. 9,132
In process research and development........................ 106,962
Accrued liabilities and unearned revenue................... (3,194)
=========
Original value of Delrina obligation....................... $120,309
=========
The allocation of the purchase price is based on an independent valuation.
The amount allocated to in process research and development related to the
purchased Delrina technology which had not reached technological feasibility at
the time of the acquisition. In accordance with SFAS No.2, this amount has been
recorded as a charge to earnings in the period of the acquisition. The
intangible assets acquired and the in process research and development are
treated as capital assets for Canadian income tax purposes and can be used to
reduce taxable income earned in Canada.
15. PROVISION FOR RESTRUCTURING COSTS
On March 17, 1999, the Corporation announced a restructuring plan directed
at reducing costs. The key restructuring actions included:
o Consolidation of management responsibilities and reduction in headcount.
o Closure of redundant facilities.
o Reduction in the carrying value of certain capital assets primarily related
to past acquisitions.
o Cancellation of certain commitments and other cost.
The following table summarizes the activity in the provision for
restructuring costs during the year:
Other Total Non
Employee Cash Cash Cash Total
Termination Facilities Costs Costs Costs Provision
------------------------------------------------------------
Restructuring
provision......... $5,252 $2,914 $726 $8,892 $21,611 $30,503
Cash payments....... (1,175) (36) (207) (1,418) -- (1,418)
Non-cash items...... -- -- -- -- (21,611) (21,611)
---------------------------------------- -----------------
Balance,
April 30, 1999.... $4,077 $2,878 $519 $7,474 $ -- $ 7,474
======================================== ======== ========
Long term balance... $ 500 $2,307 $418 $3,225 $ -- $ 3,225
======================================== ======== ========
Employee terminations totalled 105 and included 46 in sales and marketing,
40 in research and development, 12 in internal corporate services, and 7 in
systems and consulting services.
Facilities costs consisted primarily of $2.1 million related to the closure
of the Company's UK facilities and $780,000 related to the closure of the
Company's Toronto facility. The provision for redundant facilities includes
management's best estimates and actual costs could differ from these estimates.
Other cash costs related primarily to the cancellation of trade shows and
other commitments.
Non-cash costs include impairment losses of $21.6 million related to assets
held for use. The losses are comprised of $16.7 million related to marketing and
distribution rights, $3.1 million related to goodwill, and $1.9 million related
to other capital assets.
In accordance with SFAS 121 management reviews the carrying value of
long-lived assets whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. As part of the restructuring of the
Company's operations, management will focus on its core products and traditional
markets. As a result, the carrying value of certain of the Company's long-lived
assets related to, among others, the Eclipse and Proactive acquisitions was
higher than their fair value. Management used the discounted cash flows method
to arrive at the estimated fair value of the assets.
The cash costs of restructuring relating to facilities are payable over a
period of 10 years. All other cash costs of restructuring are payable over the
next two years.
16. RECENT ACCOUNTING PRONOUNCEMENTS
The Company has adopted the SFAS No. 130, "Reporting Comprehensive Income"
in 1999.
In December 1998, the American Institute of Certified Public Accountants
(AICPA) issued the SOP 98-9 "Modification of SOP 97-2, Software Revenue
Recognition, With Respect to Certain Transactions". The Company will adopt SOP
98-9 during the year ending April 30, 2000. The Company is currently studying
the impact, if any, of such adoption on its future results of operations and
financial position.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). This statement establishes
accounting and reporting standards for derivative instruments and hedging
activities and is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. Although the impact of SFAS 133 on the Company's financial
disclosures is not known at this time, the Company will adopt SFAS 133 during
the year ending April 30, 2001.
In April, 1998, the AICPA issued SOP 98-5, "Reporting Costs of Start-Up
Activities". This statement establishes accounting and reporting standards for
start-up costs and organization costs. This SOP is effective for fiscal years
beginning after December 15, 1998. The Company will adopt SOP 98-5 in its fiscal
year ending April 30, 2000.
17. THE YEAR 2000
The Year 2000 issue arises because many computerized systems use two digits
rather than four to identify a year. Date sensitive systems may recognize the
Year 2000 as 1900 or some other date, resulting in errors when information using
Year 2000 dates is processed. In addition, similar problems may arise in some
systems which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 issue may be experienced before, on, or after
January 1, 2000, and if not addressed, the impact on operations and financial
reporting may range from minor errors to significant systems failure which could
affect an entity's ability to conduct normal business operations. It is not
possible to be certain that all aspects of the Year 2000 issue affecting the
Company, including those related to the efforts of customers, suppliers, or
other third parties, will be fully resolved.
18. SUBSEQUENT EVENTS
In May 1999, the Company sold all of the Common and Preference Shares of
its multimedia subsidiary, Why Interactive, to a third party for $6.4 million.
The assets held by Why Interactive have been grouped as "Asset for sale".
19. RECLASSIFICATIONS
Certain reclassifications have been made to the prior years' balances to
conform to the current year's presentation.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The Company is a "foreign private issuer" and as such is not subject to
section 16(a) of the Securities and Exchange Act of 1934.
The following table sets forth certain information concerning the executive
officers and directors of the Company:
Name Age Title
- --------------------------------------------------------------------------------
Abraham E. Ostrovsky....... 56 Chairman and Director
John B. Kelly.............. 59 President and Chief Executive Officer and
Director
James Bursey................ 41 Senior Vice President & General Manager,
Operations
Ted Capes.................. 45 Vice President, Product Development and
Customer Services
Jeffrey McMullen........... 39 Vice President Finance and Chief Financial
Officer
Hugh Millikin.............. 42 Senior Vice President, Asia/Pacific
Andrew Jackson............. 29 Senior Vice President, Marketing
Keith Sinclair............. 48 Vice President, Human Resources & Corporate
Services
Deborah L. Weinstein....... 39 Secretary
John Gleed................. 53 Director
Thomas E. Hicks............ 46 Director
Robert F. Allum............ 53 Director
Eric R. Goodwin............ 57 Director
Stephen A. Holinski........ 52 Director
Graham C. Macmillan........ 46 Director
Dennis B. Maloney.......... 51 Director
John B. Millard............ 60 Director
Donald J. Payne............ 66 Director
Stanley A. Young........... 72 Director
Siegfried E. Buck.......... 50 Director
Mr. Ostrovsky joined the Company in August 1991 as Executive Vice President
and Chief Operating Officer. He served as President and Chief Executive Officer
from November 1991 to March 1994, and as the Company's Chairman and Chief
Executive Officer from March 1994 to August 1995, when he resigned as the
Company's Chief Executive Officer. He has served as a director of the Company
since 1991. Mr. Ostrovsky was Chairman of the Board of Directors and Chief
Executive Officer of Compressant Corporation from March 1996 to December 1997.
Mr. Ostrovsky is a director of SEEC, Inc., Indigo N.V. and Net Manage.
Mr. Kelly joined the Company in March 1994 as President and Chief Operating
Officer, and was appointed Chief Executive Officer on August 24, 1995. Mr. Kelly
has served as a director of the Company since 1988. Prior to joining the
Company, he was President and Chief Executive Officer of Why Interactive Inc.
(formerly DVS Communications Inc.), a multi-media based integrated learning
systems company between 1985 and March 1994. Why Interactive Inc. was acquired
by the Company on March 31, 1994.
Mr. Bursey joined JetForm as Vice President of Services in May 1995. He was
promoted to his current position in February 1999. Prior to joining the Company,
Mr. Bursey was Managing Director Financial Services at SHL Systemhouse and
Executive Director at Datacor Atlantic.
Mr. Capes joined the Company in January 1999 as Vice President,
Product/Program Management. In February 1999 he was promoted to Vice President,
Product Development and Customer Services. Prior to joining the Company, Mr.
Capes was Vice President of Public Carrier Networks at Nortel, where he had
worked since 1988. Prior to that, he spent a number of years with Bell Canada.
Mr. McMullen joined the Company in October 1994 as Controller. He was
promoted to Vice President and Controller in June 1997, and to his current
position in September 1998. Prior to joining the Company, Mr. McMullen was
employed by Asea Brown Boveri Inc., the Canadian subsidiary of the ABB Group, a
multinational provider of electro-technical equipment.
Mr. Millikin joined the Company in February 1994, as president and CEO of
JetForm Pacific Pty Limited. He was promoted to Senior Vice President Asia
Pacific in May 1996. Prior to joining the Company Mr. Millikin was employed by
Indigo Pacific as Managing Director.
Mr. Jackson joined JetForm in 1989 on a part-time basis as an Application
Developer. He joined the Company on a full time basis as Director, Customer
Training in June 1992, and was then promoted to Product Manager in June 1996, to
Vice President, Product Marketing in May, 1998, and finally, to his current
position as Senior Vice President, Marketing in May 1999.
Mr. Sinclair joined JetForm Corporation on May 19, 1999 as V. P. Human
Resources & Corporate Services. Prior to joining the Company, Mr. Sinclair was
Vice-President, Organizational Leadership & Development with Milltronics
Limited, a Peterborough, Ontario based designer, manufacturer and marketer of
electronic process measurement instrumentation.
Ms. Weinstein has served as secretary of the Company since September 1993.
Ms. Weinstein is a founding partner of LaBarge Weinstein, Canadian legal counsel
to the Company. From February 1991 to January 1997, Ms. Weinstein was a partner
with the law firm of Blake, Cassels & Graydon. Ms. Weinstein currently acts as a
director of MOSAID Technologies Incorporated and AIT Advanced Information
Technologies Corporation.
Mr. Gleed is a founder of the Corporation and was its President from June
1982 until June 1990, when he was appointed to the position of Senior Vice
President and Chief Technology Officer with the Corporation, which he held until
his retirement on June 30, 1999. See "Termination of Employment" below. Mr.
Gleed served as Chairman of the Board from June 1990 to March 1994.
Mr. Hicks is a founder of the Corporation and served as a senior project
manager from the Corporation's inception until September 1991, when he was
appointed Vice President, Systems Engineering. In March 1994, he was appointed
Vice President, Strategic Programs and became Vice President and Chief
Information Officer in January 1997. In May 1998, he became Vice
President--Group Product Manager for the Corporation's Output Products.
Mr. Allum has served as a director of the Company since 1983. He is a
founder of the Company and was Chairman of the Board from 1983 until June 1990,
when he was appointed to the position of Executive Vice President -- Consulting
Services, which he held until March 1994. From March 1994 until April 1996, Mr.
Allum was the Company's Vice President--Special Projects. In April 1996, Mr.
Allum resigned as an officer of the Company to take his current position as
President of Tierra Communications Inc.
Mr. Goodwin has served as a director of the Company since September 1996.
He is a founder of Fulcrum Technologies Inc., a provider of text retrieval
software, and was its President and Chief Executive Officer from 1990 until
January 1997, when he became its Chairman and Chief Executive Officer. He is
currently Chairman and Chief Executive Officer of Media Synergy Inc.
Mr. Holinski has served as a director of the Company since 1995. He has
been Executive Vice President and Chief Financial Officer of North American
Gateway Inc. since May 1999. Prior to joining North American Gateway, he was the
Senior Vice President and Chief Financial Officer of Moore Corporation Limited
between May 1994 and May 1999. Prior to joining Moore, Mr. Holinski was
Treasurer of Northern Telecom Ltd. from March 1994 until May 1994, and Vice
President Product Finance from September 1993 until March 1994. Mr. Holinski was
Vice President Finance with Northern Telecom Europe from January 1991 until
September 1993.
Mr. Macmillan has served as a director of the Company since 1994. Mr.
Macmillan was a Director of Investment Banking at Richardson Greenshields of
Canada Ltd. ("Richardson Greenshields") from 1989 to November 1996. Mr.
Macmillan became a Vice President and Director of RBC Dominion Securities Inc.
following the completion of the acquisition of Richardson Greenshields by RBC
Dominion Securities Inc. in November 1996.
Mr. Maloney has served as a director of the Company since 1994 and is
currently President and Chief Executive Officer of Insurdata Inc. ("Insurdata"),
a leading supplier of technology solutions to the health care industry. Prior to
joining Insurdata in January 1997, Mr. Maloney spent 20 years with SHL
Systemhouse Inc., most recently as President of the Global Outsourcing Division.
Mr. Maloney began his career with IBM.
Dr. Millard has served as a director of the Company since June 1998. Mr.
Millard was President and Chief Executive Officer, and director of Mitel
Corporation between 1993 and 1998. Prior to joining Mitel, Dr. Millard was
Senior Vice President of NEC America from 1990 to 1993. Mr. Millard is a
director of Mitel Corporation, Mosaid Technologies Incorporated, SiGe
Microsystems and Positron Public Safety Systems.
Mr. Payne has served as a director of the Company since 1995. He became the
Chief Operating Officer of Bitwise Designs Inc. in 1996. Mr. Payne was President
of the Air Courier Division, Federal Armored Express, Inc. from 1993 to 1996.
From 1990 to 1993, he was President and Chief Executive Officer of Enable
Software, Inc. In June 1996, Mr. Payne was elected to the Board of Directors of
Flo Management Technologies, a developer of medical software, and effective
October 1998, he became President, HealthCare Division.
Mr. Young has served as a director of the Company since 1990. Mr. Young has
been active as a consultant and venture capital investor for the past six years
and has been Chairman, President and Chief Executive Officer of Young Management
Group, Inc., a management consulting firm, since March 1994.
Mr. Buck joined Moore Corporation in 1996. Prior to joining Moore, Mr. Buck
was Group President of Bell Sports Corporation.
Committees of the Board of Directors
There are two standing committees of the Board of Directors: the Audit
Committee and the Compensation Committee. The Board of Directors does not have a
Nominating Committee.
The Audit Committee oversees the Company's financial reporting process and
internal controls, and consults with management, internal accountants, and the
Company's independent auditors on matters related to the annual audit of the
Company and the internal controls, published financial statements, accounting
principles and auditing procedures being applied. The Committee also reviews
management's evaluation of the auditors' independence and submits to the Board
of Directors its recommendations for the appointment of auditors. The members of
the Audit Committee are Messrs. Holinski, Allum and Young.
The Compensation Committee has administered the Company's 1990 Employee
Stock Option Plan and 1993 Employee Stock Option Plan and currently administers
the 1995 Stock Option Plan and the 1997 Employee Stock Purchase Plan. The
Committee also consults generally with, and makes recommendations to, the Board
of Directors on matters concerning executive compensation, including individual
salary rates, supplemental compensation and special awards. The members of the
Compensation Committee are Messrs. Allum, Macmillan and Payne.
Board and Board Committee Meetings
During the fiscal year ended April 30, 1999, the Board of Directors held 8
meetings, the Audit Committee held 4 meetings and the Compensation Committee
held 4 meetings. All Directors attended at least 75% of the aggregate of all
meetings of the Board and all committees on which they served.
Item 11. EXECUTIVE COMPENSATION
The following table sets forth the total compensation paid to the Chief
Executive Officer, the four other most highly compensated executive officers of
the Company and the two other former executive officers whose compensation would
have been disclosed if they were still employed by the Company for the fiscal
years ended April 30, 1999, 1998 and 1997:
<TABLE>
<CAPTION>
Long Term
Compensation
Annual Compenation Awards
------------------- ------------
Year
Name and ended Number of Other
Principal Position April 30, Salary(1) Bonus(1) Options(2) Compensation(1)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
John B. Kelly 1999 $455,000 $ - 84,600 $ -
President and Chief 1998 $348,750 $111,019 190,000 $ -
Executive Officer 1997 $240,000 $ - 50,000 $ -
James Bursey 1999 $229,628 $ 40,000 59,340 $10,000
Senior Vice President 1998 $ - $ - - $ -
Operations 1997 $ - $ - - $ -
John Gleed(3) 1999 $211,250 $ - 25,300 $10,000
Senior Vice President and 1998 $202,500 $ 64,463 82,000 $ -
Chief Technology Officer 1997 $150,000 $ - 20,000 $ -
Carlos Fox(4) 1999 $220,000 $ 20,000 - $11,000
Senior Vice President 1998 $ - $ - - $ -
Marketing 1997 $ - $ - - $ -
Hugh Milliken 1999 $177,333 $ - 16,600 $ -
Senior Vice President 1998 $ - $ - - $ -
Business Development 1997 $ - $ - - $ -
Philip Weaver(5) 1999 $340,416 $ - - $46,620
Former Executive Vice President 1998 $300,000 $ 95,500 152,000 $ -
and Chief Operating Officer 1997 $230,000 $ - 35,000 $ -
Ian Fraser(6) 1999 $220,000 $ 13,000 - $11,000
Former Senior Vice President 1998 $222,318 $ 47,750 35,000 $ -
Sales 1997 $ 43,750 $ 17,500 30,000 $ -
</TABLE>
(1) All references to "$" in this section are to Canadian dollars.
(2) The Company has not issued any stock appreciation rights.
(3) Mr. Gleed was serving as an executive officer on April 30, 1999 but retired
from the Corporation on June 30, 1999.
(4) Mr. Fox was serving as an executive officer on April 30, 1999, but his
employment was terminated on June 30, 1999.
(5) Mr. Weaver's employment with the Corporation was terminated on February 19,
1999. This additional disclosure is provided as Mr. Weaver would have been
included as part of the four most highly paid executive officers above but
for the fact that the individual was not serving as an executive officer of
the Company at the end of fiscal 1999.
(6) Mr. Fraser's employment with the Corporation was terminated on April 30,
1999. This additional disclosure is provided as Mr. Fraser would have been
included as part of the four most highly paid executive officers above but
for the fact that the individual was not serving as an executive officer of
the Company at the end of fiscal 1999.
The following table sets forth the stock options granted during the fiscal
year ended April 30, 1999 to each of the Company's executive officers named in
the Summary Compensation Table:
<TABLE>
<CAPTION>
1999 Stock Option Grants
- -----------------------------------------------------------------------------------------------------------------
% of total Potential Realized Value
Shares options at Assumed Annual Rate
underlying granted to Exercise of Stock Price
number of employees Price per Appreciation over
options in Fiscal Share Option Term (3)
-------------------------
Name granted 1999 (in US$) Expiry 5% 10%
---- ------- ---- -------- ------ -- ---
<S> <C> <C> <C> <C> <C> <C>
John B. Kelly 84,600(1) 8.2% 3.813 April 6, 2003 104,485 225,013
63,550(2) 6.1% 3.813 April 6, 2000 18,210 36,420
John Gleed 25,300(1) 2.4% 3.813 April 6, 2003 31,247 67,291
James Bursey 59,340(1) 5.7% 3.813 April 6, 2003 73,288 157,828
Hugh Millikin 16,560(1) 1.6% 3.813 April 6, 2003 20,452 44,045
Carlos Fox -- -- -- -- -- --
Ian Fraser -- -- -- -- -- --
Philip Weaver -- -- -- -- -- --
</TABLE>
- ---------------
(1) Options are exercisable starting 6 months after the date of grant, with
one-sixth of the shares becoming exercisable at that time and with an
additional one-sixth of the option shares becoming exercisable on each
successive six month period, with full vesting occurring on the third
anniversary date. All options expire on the fourth anniversary date.
(2) Options are exercisable on date of grant and expire on the first
anniversary of grant.
(3) The calculated potential realized value is expressed in Canadian dollars
using the exchange rate in effect at the date of option grant.
Aggregate Option Exercises and Year-end Option Values
The following table sets forth the number of shares acquired on exercise of
stock options and the aggregate gains realised on exercise during the fiscal
year ended on April 30, 1999, by the Company's executive officers named in the
Summary Compensation Table. The table also sets forth the number of shares
covered by exercisable and unexercisable options held by such executives on
April 30, 1999, and the aggregate gains that would have been realised had these
options been exercised on April 30, 1999, even though the exercisable options
were not exercised, and the unexercisable options could not have been exercised,
on April 30, 1999.
<TABLE>
<CAPTION>
Shares
Acquired Number of Shares
on Covered by Value of Unexercised
Exercise Unexercised Options in-the-money Options
duromg at April 30, 1999 at April 30, 1999(b)
Fiscal Value -------------------------- --------------------------
Name 1999 Realized(a) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
John B. Kelly 61,924 $1,190,133 225,218 192,932 $98,333 $130,904
John Gleed - - 66,335 70,965 - 39,147
James Bursey - - 59,334 84,006 - 91,818
Carlos Fox - - 40,334 27,666 - -
Hugh Millikin - - 26,669 29,891 - 25,623
Philip Weaver 17,000 247,795 119,668 87,332 - -
Ian Fraser - - 38,334 26,666 - -
</TABLE>
- ---------------
(a) Value is based on the closing price on the date of exercise less the
exercise price and the closing exchange rate on the date of exercise.
(b) Value of exercisable and unexercisable options is based on the April 30,
1999, closing bid price of US$ 4.875 per share and exchange rate of US$1.00
'Cdn. $1.4570, less the exercise price. Options are in-the-money if the
market value of the shares covered thereby is greater than the option
exercise price.
The company does not maintain any long-term incentive plans.
Compensation of Directors
The Board of Directors has determined for the year ended April 30, 1999
that each non-employee, non-Moore nominated director be paid $10,000 in
director's fees, and be granted 10,000 options, one half of which vested
immediately and one half of which vests on the first anniversary of grant. The
Chairman of the Board was granted an additional 5,000 options with the same
terms. Non-employee directors are reimbursed for their reasonable expenses
incurred in attending Board and committee meetings.
Employment Agreements
The Corporation has entered into employment agreements with John Kelly,
Hugh Millikin, John Gleed, Carlos Fox, Philip Weaver and Ian Fraser, each of
which, except as noted below, contain substantially similar provisions.
Each employment agreement provides that the executive shall devote his full
time and attention to performing his duties for the Corporation. In the event of
termination by the executive for good reason (a material change in his
responsibilities, a failure to maintain his compensation and benefits with
industry standards, a material breach by the Corporation under the employment
agreement, or the failure by the Corporation to have the employment agreement
assumed by any successor to the Corporation), or by the Corporation for other
than cause, death, disability or retirement, the Corporation will pay salary and
vacation pay earned to the date of termination as well as a multiple of the
executive's salary and up to $30,000 for job relocation (the "Termination
Payments"). Except as noted below, the Corporation will also continue all
granted options according to their terms. Either party may terminate the
employment agreement on thirty days notice within 90 days of a change in control
of the Corporation and if the Corporation does so, it shall be obligated to make
the Termination Payments and all granted options shall become immediately
exercisable if the executive is terminated by the Corporation within a year of
the change in control. Each employment agreement provides that the executive
maintain the confidentiality of the Corporation's confidential information
indefinitely and further provides that the executive shall not compete with the
Corporation nor solicit its employees for a certain period of time following
termination (the "Non-compete Term").
Mr. Kelly's Termination Payments are equal to three times his then current
salary and up to $30,000 for job relocation expenses. His Non-compete Term is
for three years.
Mr. Millikin's Termination Payments are equal to one times his then current
salary and up to $15,000 for job relocation expenses. His Non-compete Term is
for one year. Mr. Millikin's options will continue to vest and be exercisable in
accordance with their terms for a period of one year after termination by the
Corporation for other than just cause, disability or death or for termination by
executive for good reason.
Mr. Gleed's Termination Payments are equal to 1.25 times his then current
salary and up to $30,000 for job relocation expenses. His Non-compete Term is
for 18 months.
Mr. Fox's Termination Payments are equal to one times his then current
salary and up to $15,000 for job relocation expenses. His Non-compete Term is
for one year. Mr. Fox's options will continue to vest and be exercisable in
accordance with their terms for a period of one year after termination by the
Corporation for other than just cause, disability or death or for termination by
executive for good reason.
Mr. Weaver's Termination Payments are equal to two times his then current
salary and up to $30,000 for job relocation expenses. His Non-compete Term is
for two years.
Mr. Fraser's Termination Payments are equal to one times his then current
salary and up to $15,000 for job relocation expenses. His Non-compete Term is
for one year. Mr. Fraser's options will continue to vest and be exercisable in
accordance with their terms for a period of one year after termination by the
Corporation for other than just cause, disability or death or for termination by
executive for good reason.
The Corporation entered into an employment agreement with James Bursey. For
termination by the Corporation other than for serious misconduct, the
Corporation shall provide the greater of six month's notice or the statutory
requirement and reserves the option of paying the amount of salary Mr. Bursey
would have earned during such period instead. For termination for serious
misconduct, the Corporation may terminate without prior notice or salary in lieu
of notice. Mr. Bursey may terminate on one month's notice.
Termination of Employment
Effective February 19, 1999, Mr. Weaver's employment was terminated by the
Corporation for other than cause, death or disability in accordance with the
terms of his employment agreement.
Effective April 30, 1999, Mr. Fraser's employment was terminated by the
Corporation for other than cause, death or disability in accordance with the
terms of his employment agreement.
Effective June 30, 1999, Mr. Fox's employment was terminated by the
Corporation for other than cause, death or disability in accordance with the
terms of his employment agreement. Mr. Fox will provide five hours of consulting
services per month from July 1, 2000 to December 31, 2000. In return, he may
exercise all options that vest on or prior to December 31, 2000.
Effective June 30, 1999, John Gleed retired from the Corporation. From July
1, 1999 to April 30, 2002, the Corporation will pay him a retainer of $7,500 per
month for up to five days of work with additional time billed at $1,500 per day.
Mr. Gleed's anticipated activities are strategic consulting and competitive
analysis for the Corporation. The Corporation will continue his medical and life
insurance coverage and the vesting of his granted stock options for so long as
he continues to be a strategic consultant or director of the Corporation.
Directors' And Officers' Liability Insurance
The Company presently maintains directors' and officers' liability
insurance in the aggregate principal amount of US$10.0 million. The annual
premium payable for this insurance during the year ended April 30, 1999, was
$185,500. The by-laws of the Company generally provide that the Company shall
indemnify a director or officer of the Company and certain other bodies
corporate against liability incurred in such capacity to the extent permitted or
required by the Canada Business Corporations Act. To the extent the Company is
required to indemnify the directors or officers pursuant to the By-laws, the
insurance policy provides that the Company is liable for the initial US$100,000
in the aggregate for each loss with respect to the insuring agreement.
Compensation Committee Interlocks and
Insider Participation in Compensation
Decisions
At April 30, 1999, the members of the Compensation Committee were Messrs.
Allum, Macmillan and Payne, all non-employee directors of the Company. Graham C.
Macmillan, a director of the Company and a member of the Compensation Committee,
is a Vice President and Director of RBC Dominion Securities Inc., a provider of
investment banking and other services to the Company. The Committee has a
mandate to: (a) monitor compliance with legislation applicable in respect of
employment practices of the Company, (b) determine the appropriate allocation of
options, (c) recommend Chief Executive Officer and senior officer compensation,
(d) monitor compliance with statutory requirements for employment matters
including remittances and legislation, and (e) review levels of compensation
generally for the Company. The Committee met three times in fiscal 1999 and
acted by way of resolution on other occasions.
Report on Executive Compensation
The philosophy of the Corporation in the determination of senior executive
compensation is to encourage performance in order to expand the position of the
Corporation in a highly competitive environment. For the year ended April 30,
1999, the process utilized by the Compensation Committee in determining
executive officer compensation levels was based upon the Committee's subjective
judgment and took into account both qualitative and quantitative factors. Among
the factors considered by the Committee were the recommendations of the Chief
Executive Officer with respect to the compensation of the Corporation's key
executive officers. However, the Committee made the final compensation decisions
concerning such officers. The Committee established the compensation payable for
John B. Kelly, President and Chief Executive Officer. Mr. Kelly then
recommended, subject to the Committee's review and the Board's approval, the
compensation payable to the other executive officers.
The Committee's fundamental policy is to offer the Corporation's executive
officers competitive compensation opportunities based upon overall Corporation
performance, their individual contribution to the financial success of the
Corporation, and their personal performance. It is the Committee's objective to
have a substantial portion of each officer's compensation contingent upon the
Corporation's performance, as well as upon his or her own level of performance.
Accordingly, each executive officer's compensation package comprises three
elements: (i) base salary, which is established primarily on the basis of
individual performance and market considerations; (ii) annual variable incentive
compensation awards payable in cash and tied to the Corporation's achievement of
financial performance goals and the executive's contribution and, (iii) stock
option grants at market price which strengthen the mutuality of interests
between the executive officers and the shareholders. In general, under the terms
of the stock option plan, options must be exercised within a period of five
years from the date of the grant. All options granted terminate 30 days after
termination of employment unless otherwise determined by the Chief Executive
Officer, or as provided in an executive's employment agreement.
Performance Graph
The Common Shares of the Company began trading on the NASDAQ Small Cap
Market System in April 1993. The following graph compares the yearly percentage
return since April 30, 1993 on the Company's Common Shares, compared with the
percentage change in the NASDAQ index of all US and foreign issues and the
NASDAQ index of computer and data processing companies.
<TABLE>
<CAPTION>
Apr-94 Apr-95 Apr-96 Apr-97 Apr-98 Apr-99
<S> <C> <C> <C> <C> <C> <C>
Common shares of the Company 34% 173% 326% 229% 345% 4%
NASDAQ index of US and Foreign issues 11% 27% 79% 92% 187% 281%
NASDAQ index of Computer and Data Processing companies 10% 56% 134% 160% 305% 520%
</TABLE>
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders
The following table sets forth certain information regarding beneficial
ownership of the Company's Common Shares as of July 26, 1999: (i) by each person
who is known by the Company to own beneficially more than five percent of the
outstanding Common Shares, (ii) by each director and executive officer of the
Company and (iii) by all directors and executive officers of the Company as a
group at any time during fiscal year ended April 30, 1999. There is no family
relationship between any directors or executive officers of the Corporation.
Number of Shares Percentage of Shares
Beneficial Owner(1) Beneficially Owned Beneficially Owned
Directors and Executive Officers
Robert F. Allum(2)................. 209,977 1.08%
John Gleed(3)...................... 250,142 1.28%
Eric R. Goodwin(4)................. 18,667 *
Thomas E. Hicks(5)................. 194,892 1.00%
Stephen A. Holinski................ 2,000 *
John B. Kelly(6)................... 455,384 2.31%
James Bursey(7).................... 63,334 *
Jeffrey McMullen(8)................ 22,041 *
Hugh Millikin(9)................... 45,685 *
Graham C. Macmillan(10)............ 20,867 *
Dennis B. Maloney(11).............. 23,667 *
John B. Millard(12)................ 8,334 *
Abraham E. Ostrovsky(13)........... 151,312 *
Donald J. Payne(14)................ 43,167 *
Deborah L. Weinstein(15)........... 30,167 *
Stanley A. Young(16)............... 177,284 *
Siegfried E. Buck.................. -- *
Ted Capes.......................... 5,300 *
Andrew Jackson(17)................. 6,987 *
Keith Sinclair..................... 4,000 *
All directors and executive
officers (18) 1,774,919 8.81%
5% Shareholders
Moore Corporation Limited(19)...... 2,558,748 12.79%
TAL Investment Counsel(20) ........ 1,756,600 9.03%
- ---------------
* Less than 1%
(1) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from July 26, 1999, whether pursuant
to the exercise of options, conversion of securities or otherwise. Each
beneficial owner's percentage of ownership is determined by assuming that
options (and, in the case of Moore, convertible Preference Shares) that are
held by such person (but not those held by any other person) and which are
exercisable (or convertible) within 60 days of July 26, 1999, have been
exercised. Unless otherwise noted in the footnotes below, the Company
believes all persons named in the table have sole voting power and
investment power with respect to all Common Shares beneficially owned by
them. Statements as to securities beneficially owned by directors, nominees
for directors and executive officers, or as to securities over which they
exercise control or direction, are base upon information obtained from such
directors, nominees and executives and from records available to the
Corporation.
(2) Includes 61,029 common shares owned by Mr. Allum's spouse. Also includes
16,667 common shares subject to options. Mr. Allum disclaims any beneficial
interest in shares owned by his spouse.
(3) Includes 100,000 common shares owned by two holding companies controlled by
Mr. Gleed for the benefit of is children. Also includes 73,001 common
shares subject to options. Also includes 5,000 common shares and 11,986
common shares subject to options owned by Mr. Gleed's spouse. Mr. Gleed
disclaims any beneficial interest in such common shares and options owned
by his spouse.
(4) All common shares subject to options.
(5) Includes 82,268 common shares owned by Mr. Hicks' spouse. Also includes
31,334 common shares subject to options. Also includes 5,675 common shares
subject to options owned by Mr. Hicks' spouse. Mr. Hicks disclaims any
beneficial interest in such common shares and options owned by his spouse.
(6) Includes 241,884 common shares subject to options.
(7) All common shares subject to options.
(8) Includes 21,333 common shares subject to options.
(9) Includes 30,002 common shares subject to options.
(10) Includes 18,667 common shares subject to options.
(11) Includes 18,867 common shares subject to options.
(12) Includes 3,334 common shares subject to options.
(13) Includes 35,000 common shares owned by two trusts (17,500 common shares
each) of which Mr. Ostrovsky is the trustee, for the benefit of Mr.
Ostrovsky's two children. Also includes 53,000 common shares subject to
options.
(14) Includes 32,667 common shares subject to options.
(15) Includes 16,667common shares subject to options.
(16) Includes 19,200 common shares owned by the SAY Family Limited Partnership
of which Mr. Young is one of the general partners and in which Mr. Young
holds a 20% beneficial interest. Also includes 50,617 common shares owned
by Mr. Young's spouse. Mr. Young disclaims any beneficial interest in the
common shares owned by his spouse. Also includes 76,800 common shares owned
by the Stanley Young Trust. Also includes 6,667 common shares subject to
options.
(17) All common shares subject to options.
(18) Includes common shares indirectly owned and 670,539 common shares that may
be acquired upon exercise of options as described in footnotes (2) - (17).
Excludes the 2,558,748 common shares beneficially owned by Moore
Corporation Limited, which are also deemed to be beneficially owned by Mr.
Buck, a director of the Corporation, by virtue of the fact that he is an
officer of Moore Corporation Limited. The beneficial ownership of such
common shares by Moore Corporation limited is set forth above. Also
includes 1,378 common shares and 40,334 common shares subject to options
owned by Carlos Fox who was terminated on June 30, 1999.
(19) Includes 1,992,084 common shares, 450,448 convertible preference shares
which are convertible at any time into 450,448 common shares, subject to
anti-dilution provisions, and 116,216 common shares subject to options.
(20) The Business address of TAL Investment Counsel Ltd. Is 1000, de la
Gauchetiere West, Suite 3100, Montreal, Quebec, H3B 4W5.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company concluded an investment agreement with Moore in August 1994
under which Moore acquired 2,263,782 convertible preference shares (the
"Preference Shares") representing approximately 18.5% of the Company's common
share equivalents then outstanding for net proceeds of approximately $24.8
million. Moore also acquired an option to purchase 178,750 Common Shares of the
Company for a price of US$8.25 per share (the "Special Options") and a
conditional option to acquire 7,726,375 Common Shares of the Company no later
than December 30, 1999, at prices ranging from US$15.00 per share to US$20.00
per share, subject to certain anti-dilution provisions (the "Moore Options"). In
accordance with these anti-dilution rights, during the year ended April 30,
1996, Moore also acquired an option to acquire 116,216 Common Shares of the
Company at US$16.50 per share.
In June 1996, the Company negotiated the repurchase of the Moore Options in
order to eliminate the perceived dilutive effect of the Moore Options on the
price of the Company's Common Shares. As a result, on June 27, 1996, the Company
entered into an agreement with Moore under which a subsidiary of the Company
repurchased the Moore Options for consideration of US$34.0 million ($46.3
million), paid for through the issuance by the Company to Moore of 1,813,334
Common Shares and incurred additional expenses associated with the transaction
of $749,000. The consideration paid for the options was determined by arm's
length negotiation between the parties. Subsequently, Moore sold to various
third parties 1,813,334 of its Preference Shares which were converted into an
equal number of Common Shares and Moore exercised the Special Options to acquire
178,750 Common Shares at US$8.25 per share. As a result of the foregoing, at
April 30, 1999, Moore held 1,992,084 Common Shares, 450,448 Preference Shares
and options to purchase 116,216 Common Shares, or approximately 12% of all
outstanding Common and Preference Shares on a fully diluted basis.
The Company and Moore also entered into a long-term strategic alliance in
August 1994, under which sales of the Company's products and services in certain
vertical markets would be focused through Moore. Moore also committed to make
certain minimum purchases from the Company of E-Forms products for resale. The
Company and Moore amended the terms of the strategic alliance as of June 27,
1996, April 30, 1997, and April 30, 1998. Pursuant to the amended strategic
alliance, effective January 1, 2000, Moore will relinquish exclusive marketing
rights in all vertical markets and non-exclusive marketing and distribution
rights to all markets worldwide. The amended strategic alliance continues to
provide for the promotion by Moore and the Company of each other's forms
automation solutions. Under the amended strategic alliance, Moore is committed
to make purchases of the Company's products for resale of US$1.0 million in each
of calendar years 1998 through 2003.
Certain other agreements entered into with Moore in August 1994 were also
amended and restated as at June 27, 1996. As long as Moore beneficially owns at
least 10% of the outstanding common and preference shares of the Company, Moore
is entitled to nominate two directors to the Company's board of directors and as
long as Moore beneficially owns at least 5% of the outstanding common and
preference shares of the Company, Moore is entitled to nominate one director to
the Company's board of directors. For purposes of calculating Moore's beneficial
ownership, any common shares issued after June 27, 1996, pursuant to the
exercise of options or other rights granted after such date pursuant to employee
stock plans are treated as not outstanding. Certain insiders have agreed to vote
their shares in favor of Moore's nominees for election to JetForm's board of
directors. So long as Moore owns not less than 10% of the outstanding common and
preference shares, Moore continues to be entitled to a pre-emptive right with
respect to issuances by the Company of additional equity shares or shares
convertible into equity shares, although the pre-emptive right does not apply to
securities issued by the Company pursuant to employee stock purchase or stock
option or other employee stock incentive plans. Prior to conversion, each
preference share is entitled to one vote and is to vote with the common shares
as a single class; provided, that if at any time Moore's beneficial ownership of
common and preference shares is less than 15% of the outstanding common and
preference shares, Moore has agreed to vote its preference shares as directed by
the Company, with certain exceptions.
The Company and Moore have also entered into a Registration Rights
Agreement pursuant to which Moore may require the Company to register Common
Shares issued upon conversion of the Preference Shares or exercise of the
options (a "Demand Registration") under the Securities Act of 1933 (the "Act"),
subject to certain limitations. Moore will be entitled to require up to three
Demand Registrations at any time, one of which must be paid for by the Company,
and participate in any other registration of the Company's securities under the
Act, subject to certain limitations. Moore may publicly sell any Common Shares
registered under the Act.
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following Financial Statements are filed as part of this report under
Item 8 "Financial Statements and Supplementary Data".
Auditors' Report
Consolidated Balance Sheets
Consolidated Statements of Operations
Consolidated Statements of Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(a) 2. Financial Statement Schedule
The following financial statement schedule is filed as part of this report:
Schedule V Valuation and Qualifying Accounts
All other schedules are omitted as they are not required or the required
information is shown in the financial statements or notes thereto.
(a) 3. Exhibits
Exhibit
Number Description
3.1(1) Certificate of Incorporation of Registrant, as amended
3.2(1) By-laws of Registrant, as amended
10.1(1) Form of Underwriter's Warrant Agreement. (this Agreement was
executed by the parties without material change on April 21,
1993.)
10.2(1) Consulting Agreement, dated June 1, 1990, between the Registrant
and Stanley A. Young
10.3(l) Form of Consulting Agreement between the Registrant and Whale
Securities Co., L.P. (This Agreement was executed by the parties
without material change on April 28, 1993.)
10.4.1(3) Investment Agreement dated June 10, 1994, between the Registrant
and Moore Corporation Limited
10.4.2(6) Agreement to amend Investment Agreement dated June 27, 1996
between the Registrant and Moore Corporation Limited
10.5.1(3) Form of Option Agreement to be entered into between the
Registrant and Moore Corporation Limited
10.5.2(6) Assignment of Option Agreement between Moore Corporation Limited
and 3272303 Canada Inc., a wholly-owned subsidiary of the
Registrant
10.6.1(5) Strategic Alliance Agreement dated August 11, 1994 between the
Registrant and Moore Corporation Limited
10.6.2(8) Agreement to amend the Strategic Alliance Agreement dated June
27, 1996 between the Registrant and Moore Corporation Limited
10.6.3(8) Amendment to the Strategic Alliance Agreement dated April 30,
1998, between the Registrant and Moore Corporation Limited.
10.6.4(11) Amendment to the Strategic Alliance Agreement dated April 30,
1999, between the Registrant and Moore Corporation Limited.
10.7.1(6) Consulting Agreement dated August 24, 1995 between the Registrant
and Abraham Ostrovsky
10.8(5) Employment Agreement dated August 11,1994 between the Registrant
and John Gleed
10 9(1) Lease of Space in Watermill Center, Waltham, Massachusetts dated
September 30, 1992
10.10(2) Lease dated as of February 1, 1993, between the Registrant and
Arnon Development Corporation and Baix Developments Inc. for
Ottawa, Canada facility
10.11(4) Form of Amendment to Lease to be entered into between Registrant
and Arnon Development Corporation Limited and Baix Developments,
Inc.
10.12(5) Letter Agreement dated June 1995 between Arnon Development
Corporation and the Registrant
10.13(4) Lease dated April 24, 1991 between Arnon Development Corporation
and Baix Developments, Inc. and CCC Cable Consumer Channel Inc
(d/b/a Why Interactive) and amendment dated June 28, 1991.
10.14(4) Agency Agreement between the Registrant, Selling Shareholders of
the Registrant and Richardson Greenshields of Canada Limited.
10.15(5) Employment Agreement dated August 1994 between the Registrant and
Lynne Boyd
10.16(5) Employment Agreement dated August 1994 between the Registrant and
Philip Weaver
10.17(5) Employment Agreement dated August 1994 between the Registrant and
John Kelly
10.18(1) Registrant's 1990 Employee Stock Option Plan
10.19(l) Registrant's 1993 Employee Stock Option Plan
10.20(5) Registrant's 1995 Employee Stock Option Plan
10.21(7) Credit Facility dated October 25, 1996 between the Registrant and
Royal Bank of Canada
10.21.1(11) Credit Facility dated October 14, 1997 between the Registrant and
Royal Bank of Canada
10.21.2 Credit Facility dated April 7, 1999 between the Registrant and
Royal Bank of Canada
10.22(7) Receivables Purchase Agreement and Amendment Agreement dated July
31, 1996, between the Registrant and Royal Bank Export Finance
Co. Ltd.
10.23(9) Amendment to the Asset Purchase Agreement dated February 12, 1998
between the Registrant and Delrina Corporation
10.24(11) Registrant's 1997 Employee Stock Purchase Plan
10.25(10) Registrant's Shareholder Rights Plan Agreement dated June 25,
1998
10.26(11) Underwriting Agreement between the Registrant and RBC Dominion
Securities Inc., Midland Walwyn Capital Inc., Goldman Sachs
Canada and TD Securities Inc. dated April 2, 1998.
10.27 Amendment dated September 28, 1998 to the employment agreement
dated August 11, 1994 between the Registrant and John Gleed
10.28 Amendment dated September 26, 1998 to the employment agreement
dated August 11, 1994 between the Registrant and John Kelly
10.29 Amendment dated September 25, 1998 to the employment agreement
dated August 11, 1994 between the Registrant and Phil Weaver
10.30 Employment Agreement dated September 22, 1998 between the
Registrant and Carlos Fox
10.31 Employment Agreement dated September 22, 1998 between the
Registrant and Ian Fraser
10.32 Employment Agreement dated September 22, 1998 between the
Registrant and James Bursey
10.33 Employment Agreement dated September 22, 1998 between the
Registrant and Hugh Millikin
10.34 Termination Agreement dated February 19, 1999 between the
Registrant and Phil Weaver
10.35 Termination Agreement dated April 29, 1999 between the Registrant
and Ian Fraser
10.36 Termination Agreement dated June 1, 1999 between the Registrant
and Carlos Fox
21.1(6) Subsidiaries of the Registrant
23.0 Consent of PricewaterhouseCoopers LLP
(1) Incorporated by reference to the exhibits filed with the Registrant's
Registration Statement on Form SB-2 (no. 33-47864-B) (previously filed on
Form S-18) filed on May 12, 1992, and amended on March 5, 1993, and April
19, 1993, which Registration Statement became effective April 20, 1993.
(2) Incorporated by reference to the exhibits filed with the Registrant's
Report on Form 10-KSB for the fiscal year ended April 30, 1993.
(3) Incorporated by reference to the exhibits filed with the Registrant's
Report on Form 8-K dated June 10, 1994.
(4) Incorporated by reference to the exhibits filed with the Registrant's
Report on Form 10-KSB for the fiscal year ended April 30, 1994.
(5) Incorporated by reference to the exhibits filed with the Registrant's
Report on Form 10-KSB for the fiscal year ended April 30, 1995.
(6) Incorporated by reference to the exhibits filed with the Registrant's
Report on Form 10-K for the fiscal year ended April 30, 1996.
(7) Incorporated by reference to the exhibits filed with the Registrant's
Statement on Form S-1 (no. 333-6368) (originally filed on Form S-3) filed
on April 30,1997, as amended on March 3, 1997 and March 17, 1997, which
Registration Statement became effective on March 19, 1997.
(8) Incorporated by reference to the exhibits filed with the Registrant's
Report on Form 10-K for the fiscal year ended April 30, 1997.
(9) Incorporated by reference to the exhibits filed with the Registrant's
Report on Form 10-Q for the three months ended January 31, 1998.
(10) Incorporated by reference to the exhibits filed with the Registrant's
Report on Form 8-K, filed July 23, 1998.
(11) Incorporated by reference to the exhibits filed with the Registrant's
Report on Form 10-K for the fiscal year ended April 30, 1998.
(b) Reports on Form 8-K
During the year ended April 30, 1999, the Company filed the following
Reports on From 8-K and Form 8-K/A:
1. Reports on Form 8-K, dated July 23, 1998, with respect to the Company's
Shareholder Rights Plan Agreement dated June 25, 1998.
Our report on the financial statements of JetForm Corporation is included
in Item 8 of their Form 10-K. In connection with our audits of such financial
statements, we have also audited the related financial statement schedule V
listing in Item 14(a)2 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considering in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
PricewaterhouseCoopers, LLP
Chartered Accountants
Ottawa, Ontario
June 22, 1999
<PAGE>
JETFORM CORPORATION
SCHEDULE V
VALUATION AND QUALIFYING ACCOUNTS
Allowance for doubtful accounts (in thousands of
Canadian dollars)
Balance as at April 30, 1996 $ 462
Bad debt expense for the year 681
Write-off/adjustments (408)
--------
Balance as at April 30, 1997 735
Bad debt expense for the year 1,045
Write-off/adjustments (381)
--------
Balance as at April 30, 1998 1,399
Bad debt expense for the year 2,528
Write-offs/adjustments (2,003)
--------
Balance as at April 30, 1999 $ 1,924
=======
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
JetForm Corporation
Dated: July 24, 1999 /s/ John B. Kelly
- ----------------------------------- ----------------------------------------
John B. Kelly
President and Chief Executive Officer
and Director
(Principal Executive Officer)
In accordance with the Exchange Act, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
/s/ Abraham Ostrobsky /s/ Jeffrey McMullen
- ----------------------------------- ----------------------------------------
Abraham Ostrovsky Jeffrey McMullen
Chairman and Director Vice President, Finance and Chief
Financial Officer
(Principal Financial and Accounting
Officer)
/s/ John Gleed /s/ Stanley A. Young
- ----------------------------------- -------------------------------------------
John Gleed Stanley A. Young
Director Director
/s/ Eric R. Goodwin /s/ Thomas E. Hicks
- ----------------------------------- -------------------------------------------
Eric R. Goodwin Thomas E. Hicks
Director Director
/s/ Robert F. Allum /s/ Deborah L. Weinstein
- ----------------------------------- -------------------------------------------
Robert F. Allum Deborah L. Weinstein
Director Secretary
/s/ Graham C. Macmillan /s/ Stephen A. Holinski
- ----------------------------------- -------------------------------------------
Graham C. Macmillan Stephen A. Holinski
Director Director
/s/ Donald J. Payne /s/ Dennis B. Maloney
- ----------------------------------- -------------------------------------------
Donald J. Payne Dennis B. Maloney
Director Director
/s/ John B. Millard /s/ Siegfried E. Buck
- ----------------------------------- -------------------------------------------
John B. Millard Siegfried E. Buck
Director Director
Exhibit 10.21.2
April 7, 1999
Private and Confidential
JetForm Corporation
560 Rochester Street
Ottawa, Ontario
K1S 5K2
Attention: Mr. Jeffrey McMullen
Chief Financial Officer
Dear Sirs:
Further to our recent discussions, we are pleased to offer the Credit
Facility described below, superseding all previous offers, subject to the
following terms and conditions.
1. Definitions:
The definitions attached hereto in Schedule "A" are incorporated in this
agreement by reference as if set out in full herein.
2. Borrower:
JetForm Corporation (the "Borrower").
3. Lender:
Royal Bank of Canada (the "Bank"), through its Branch at 90 Sparks Street,
Ottawa, Ontario.
4. Credit Facility:
Segments (1) through (4) of the Credit Facility are available in Canadian
Dollars or the Equivalent Amount in US Dollars if US Dollars is stipulated.
(1) Operating:
(a) Royal Bank Prime based loans ("RBP Loans").
(b) Royal Bank US Base Rate based loans in US Dollars ("RBUSBR
Loans").
(c) Standby Letters of Credit and/or Guarantee ("L/G's").
(d) US Eurodollar Loans ("Libor" loans).
(e) REFCO Recourse Facilities.
(2) Foreign exchange facilities in US Dollars or the equivalent in other
foreign currencies ("FEF Contracts").
(3) Corporate Visa Purchasing Card.
(4) Term Loan:
(a) RBP Loans.
(b) RBUSBR Loans.
(c) Libor Loans.
(d) Bankers Acceptances ("B/As").
(collectively the "Borrowings").
5. Amounts:
(1) $ 10,000,000
(2) $ 50,000,000US
(3) $ 500,000
(4) $ 10,000,000
6. Purpose:
(1) Working capital requirements.
(2) Foreign exchange hedging of day-to-day transactions.
(3) Corporate purchases.
(4) Term facility to replenish working capital.
7. Repayment:
(1) Borrowings under this segment are expected to fluctuate, and are
repayable on the later of September 30, 1999 and the date of demand by
the Bank, should this segment have been converted to a demand facility
as provided for in the following sentence. Notwithstanding compliance
with the Covenants section herein, this segment shall convert to a
demand facility on September 30, 1999.
(2) Notwithstanding any other terms contained herein and regardless of the
maturity of the instruments or contracts outstanding, the Bank may, at
its sole discretion, terminate this segment of the Credit Facility at
any time.
(3) In accordance with the cardholder agreement.
(4) Borrowings under this segment are repayable on June 30, 2000.
Upon demand of Segment (1), the Borrower shall pay to the Bank all
Borrowings under this segment including the face amount of all L/G's and an
amount to reimburse the Bank for any payment made in respect of FEF
Contracts (the "Repayment Amount"). The Repayment Amount shall be
determined by the Bank based upon the mark-to-market cost to unwind such
FEF Contracts prior to their maturity. The Bank may enforce its rights to
realize upon its security and retain sufficient funds to cover amounts
outstanding by way of these instruments.
8. Availability:
(1) The Borrower may borrow, repay, convert and reborrow up to the amount
of this operating segment, provided that:
(a) The aggregate of Borrowings under Segments (1) and (4) must not
exceed the aggregate of:
(i) 67% of consolidated trade accounts receivable falling due
within the next 12 months, but excluding amounts 90 days or
more past due;
PLUS
(ii) 90% of trade receivables insured by Export Development
Corporation ("EDC"), or other similar insurer satisfactory
to the Bank;
MINUS
(iii) Potential Preferred Claims and contra-accounts.
(collectively the "Available Margin Value").
(b) L/G's will be issued for periods not exceeding one year, except with
the agreement of the Bank.
(c) Libor loans shall be for not less than US $1,000,000 and shall have a
term of not less than 30 days and not more than 180 days, subject to
the availability of US dollars in the London interbank market for the
terms selected on terms satisfactory to the Bank;
(d) Libor loans require prior notice by 10:00 am two Banking Days prior to
Settlement Date.
(2) (a) FEF Contracts may not have maturities which exceed 12 months;
(b) The amount of Borrowings ascribed to FEF Contracts shall be determined
by the Bank in its sole discretion and notified to the Borrower upon
request.
(4) The Borrower may borrow and convert up to the amount of this term segment,
provided that:
(b) Borrowings under this segment must not exceed 25% of the aggregate of
consolidated cash, cash equivalents and trade accounts receivable
falling due within the next twelve months, but excluding amounts 90
days or more past due;
(c) B/As shall be in multiples of $100,000 (minimum $500,000) and shall
have a term of not less than 90 days and not more than 180 days;
(d) Libor loans shall be for not less than US $1,000,000 and shall have a
term of not less than 30 days and not more than 180 days, subject to
the availability of US dollars in the London interbank market for the
term selected on terms satisfactory to the Bank;
(e) Libor loans require prior notice by 10:00 a.m. two Banking Days prior
to Settlement Date;
(f) Notwithstanding any other provisions of this agreement, the maturity
of the borrowing instruments selected will not be later than June 30,
2000.
9. Interest Rates & Fees:
(1) (a) Royal Bank Prime ("RBP").
(b) Royal Bank US Base Rate ("RBUSBR").
(c) Fees will be advised on a transaction by transaction basis.
(d) Libor plus 1%.
(2) N/A.
(3) The interest rates and fees may change in accordance with the
cardholder agreement, which changes will be advised in writing.
(4) (a) RBP plus 1.5%.
(b) RBUSBR plus 1.5%.
(c) B/A stamping fee of 1.5%.
(d) Libor plus 1.5%.
The rates applicable to Segment 4 will be increased by 1/2 of 1%, effective
the first day of the respective fiscal quarter, if the Borrower's reported
Tangible Net Worth falls below $47,500,000. The increase shall remain in effect
until the last day of the fiscal quarter in which reported Tangible Net Worth
again exceeds $47,500,000.
10. Payment of Interest & Fees:
RBP Loans, RBUSBR Loans: Interest on these loans shall be computed on the
daily principal amounts outstanding, at the aforementioned rates, based on
the actual number of days elapsed divided by three hundred and sixty five
(365), and shall be payable in arrears on the 25th of each month.
B/A's:
Upon the Bank accepting B/A's hereunder, the Borrower shall forthwith pay
to the Bank a stamping fee equal to 1.5% per annum, calculated on the face
amount of each accepted B/A and on the basis of the number of days in the
term of such B/A's and based on a year of 365 days or 366 days, as the case
may be.
Libor Loans:
Interest on Libor loans shall be payable, at the aforementioned rates, on
each Libor Interest Date as defined in Schedule "A" attached.
L/G's:
The Borrower shall pay fees at the rates set forth above in advance at the
time of issue of the L/G. This fee shall be based upon the amount of the
instrument issued and shall be calculated on the number of days that it
will be outstanding.
The yearly rates of interest to which the rates determined in accordance
with the Payment of Interest and Fees section of this agreement are
equivalent, are the rates so determined multiplied by the actual number of
days in the calendar year and divided by three hundred and sixty-five
(365), or, in the case of Libor Loans, three hundred and sixty (360).
11. Libor Loan & B/A Indemnity:
The Borrower shall reimburse the Bank for any additional costs or reduction
of income arising as a result of the imposition of or increase in taxes
(other than on the overall net income of the Bank) on amounts paid by the
Borrower to the Bank, an imposition of or increase in reserve requirements,
or the imposition of any other condition affecting the Credit Facility by
any government, governmental agency or body, tribunal or regulatory
authority.
It is understood by the Bank and the Borrower that the general indemnity
provided for herein shall relate only to borrowings made by the Borrower
with respect to the B/A and/or the US Eurodollar Loan ("Libor Loan")
segments of the credit facility. The Borrower shall not be required to
reimburse the Bank as provided for in the general indemnity for any
additional costs or reduction of income howsoever caused to the Bank as a
result of the Borrower's use of any other segment of the credit facility.
12. Other Fees:
Standby Fee:
A standby fee equal to 1/8 of 1% per annum calculated on the unused portion
of Segment (1) is payable monthly in arrears.
Commitment Fee:
A commitment fee of .3% with respect to Segment (4) is payable upon
acceptance of this agreement. The commitment fee is non-refundable and will
be deemed to have been earned by the Bank upon acceptance of this offer to
compensate for time, effort and expense incurred by the Bank approve these
facilities.
Nothing in this agreement shall be construed as obliging the Borrower to
pay any interest, charges or other expenses as provided by this agreement
or in any other security agreement related thereto in excess of what is
permitted by law.
13. Collateral Security:
General Security Agreement signed by the Borrower providing a first charge
on all corporate assets other than real property and assets under capital
lease.
Assignment of receivables insurance, if any.
Pledge of all issued and outstanding shares of any Material Subsidiary.
14. Conditions Precedent:
The obligation of the Bank to make available the Borrowings to the Borrower
is subject to and conditional upon:
(1) Receipt by the Bank of the within stipulated Collateral Security in
form and substance satisfactory to the Bank, together with such
corporate authorizations and legal opinions as the Bank may require;
15. Evidence of Indebtedness:
The Bank shall open and maintain at the Branch of Account accounts and
records evidencing the Borrowings made available to the Borrower by the
Bank under this agreement. The Bank shall record the principal amount of
such Borrowings, the payment of principal and interest on account of the
loans, and all other amounts becoming due to the Bank under this agreement.
The Bank's accounts and records constitute, in the absence of manifest
error, prima facie evidence of the indebtedness of the Borrower to the Bank
pursuant to this agreement.
The Borrower authorizes and directs the Bank to automatically debit, by
mechanical, electronic or manual means, any bank account of the Borrower
for all amounts payable under this agreement, including but not limited to,
the repayment of principal and the payment of interest, fees and all
charges for the keeping of such bank accounts.
16. Representations and Warranties:
The Borrower represents and warrants to the Bank that:
(a) it is a corporation validly incorporated and subsisting under the laws
of Canada, and that it is duly registered or qualified to carry on
business in all jurisdictions where the character of the properties
owned by it or the nature of its business transacted makes such
registration or qualification necessary;
(b) the execution and delivery of this agreement has been duly authorized
by all necessary actions and does not violate any law or any provision
of its constating documents or by-laws or any unanimous shareholders'
agreement to which it is subject, or result in the creation of any
encumbrance on its properties and assets except as contemplated
hereunder;
(c) all Material Subsidiaries as at the date of this agreement are listed
below and any changes thereto will be advised to the Bank in writing
within 30 days of the Borrower becoming aware of such change:
(i) JetForm Corporation (Delaware).
17. Non-Merger:
The provisions of this Agreement shall not merge with any security given by
the Borrower to the Bank, but shall continue in full force for the benefit
of the parties hereto.
18. Covenants:
The Borrower agrees:
(a) To pay all sums of money when due under this agreement;
(b) To provide the Bank with the following reports within a) 45 days of
each fiscal quarter end, and b) with respect to (i) below, within 30
days of each month end if consolidated cash and cash equivalents are
less than $30,000,000 :
(i) aged lists of accounts receivable and statement of cash holdings;
(ii) statement of Potential Preferred Claims;
(iii) internal consolidated and non-consolidated financial statements;
(iv) Certificate of its Chief Financial Officer substantially in the
form attached as Schedule "B";
(c) To provide the Bank with audited consolidated and unaudited,
non-consolidated annual financial statements within 90 days of each
fiscal year-end;
(d) To provide the Bank with annual business plans, including pro forma
balance sheets, profit & loss and cash flow statements for the next
fiscal year and such other reports as the Bank may reasonably request
from time to time;
(e) To give the Bank prompt notice of any Event of Default or any event
which, with notice or lapse of time or both, would constitute an Event
of Default;
(f) To file all material tax returns which are or will be required to be
filed, to pay or make provision for payment of all material taxes
(including interest and penalties) and other Potential Preferred
Claims which are or will become due and payable and to provide
adequate reserves for the payment of any tax, the payment of which is
being contested;
(g) Not to dispose of shares of any Material Subsidiary;
(h) Not to grant, create, assume or suffer to exist any mortgage, charge,
lien, pledge, security interest, including a Purchase Money Security
Interest, or other encumbrance affecting any of its properties, assets
or other rights;
(i) Not to sell, transfer, convey, lease or otherwise dispose of any part
of its property or assets, without the prior written consent of the
Bank, except in the ordinary course of business;
(j) Not to, directly or indirectly, guarantee or otherwise provide for, on
a direct or indirect or contingent basis, the payment of any monies or
performance of any obligations by any third party except wholly-owned
subsidiaries or, in other cases, amounts not exceeding $2,500,000 in
aggregate;
(k) To insure and to keep fully insured all properties customarily insured
by companies carrying on a similar business to that of the Borrower;
(l) Not to change its name or merge, amalgamate or consolidate with any
other corporation;
(m) To comply with all applicable environmental laws and regulations; to
advise the Bank promptly of any material breach of any environmental
regulations or licenses or any control orders, work orders, stop
orders, action requests or violation notices received concerning any
of the Borrower's property; to comply with any such requests or
notices, to diligently clean up any spills; and to hold the Bank
harmless for any costs or expenses which the Bank incurs for any
environment-related liabilities existent now or in the future with
respect to the Borrower's property; and
(n) To exercise its controlling interest in Material Subsidiaries to
ensure their compliance with (h), (i) (j), (k), (l), and (m) above;
and
(o) The Borrower covenants to provide to the Bank any and all information
that the Bank may reasonably request from time to time relating to the
state of the Year 2000 readiness of the Borrower. For the purpose of
the foregoing the "Year 2000 readiness" of the Borrower means the
ability of all information technology used by the Borrower [and its
suppliers] to continue to perform all date-related functions and
computations accurately on and after January 1, 2000.
With respect to Segment (1) only
(p) To maintain, on a consolidated basis, Tangible Net Worth of not less
than $40,000,000;
(q) To maintain, on a consolidated basis, the ratio of its total
liabilities to Tangible Net Worth at not greater than 2.0:1. Total
liabilities include all direct liabilities, except deferred taxes;
(r) To maintain, on a consolidated basis, a Quick Ratio of not less than
1.25:1.
With respect to Segment (4) only
(s) To refrain from making any cash payment with respect to the Delrina
indebtedness if such payment would reduce consolidated cash holdings
to less than $20,000,000;
(t) Upon request of the Bank, to exercise its controlling interest in
Material Subsidiaries to provide the Bank with collateral security on
all assets of such Material Subsidiaries.
19. Events of Default:
Without limitation and notwithstanding the terms for repayment of certain
facilities as recited herein, if any one or more of the following events
has occurred and is continuing:
(a) The non-payment when due of principal, interest and any other amounts
due under this agreement;
(b) The breach by the Borrower of any provisions of this agreement or any
other agreement with the Bank;
(c) The default by the Borrower under any obligation to repay borrowed
money where such obligation exceeds $1,000,000, other than amounts due
under this agreement, or in the performance or observance of any
agreement or condition in respect of such borrowed money where as a
result the maturity of such obligation is accelerated or may be
accelerated;
(d) If any representation or warranty made herein shall be false or
inaccurate in any materially adverse respect;
(e) If in the opinion of the Bank there is material adverse change in the
financial condition, ownership, or operation of the Borrower; or
(f) If proceedings for the dissolution, liquidation or winding-up of the
Borrower or for the suspension of the operations of the Borrower are
commenced, unless such proceedings are being actively and diligently
contested by the Borrower in good faith, or in the event of the
bankruptcy, liquidation, or general insolvency of the Borrower, or if
a receiver or receiver-manager is appointed for all or any part of the
business or assets of the Borrower;
(g) The breach at any time and in any material respect of the provisions
of any applicable law, regulation, by-law, ordinance or work order of
any lawful authority whether federal, provincial, state, municipal,
local or otherwise, (including without restriction, those dealing with
pollution of the environment and toxic materials or other
environmental hazards, or public health and safety), affecting any
property of the Borrower or any activity or operation carried out
thereon;
With respect to Segment (1) only
(h) A loss in any fiscal quarter greater than $7,500,000 or consecutive
quarterly losses which aggregate more than $7,500,000 on a
consolidated basis commencing with the fiscal quarter ending July 31,
1999;
then the right of the Borrower to make further Borrowings under this
agreement shall immediately terminate and the Bank may, by written notice
to the Borrower, declare the Borrowings under this agreement to be
immediately due and payable without further notice or demand.
Upon receipt of such notice, the Borrower shall immediately pay to the Bank
all Borrowings under this agreement, including the face amount all L/G's
and an amount to reimburse the Bank for any payment made in respect of FEF
Contracts (the "Repayment Amount"). The Repayment Amount shall be
determined by the Bank based upon the mark-to-market cost to unwind such
FEF Contracts prior to their maturity. The Bank may enforce its rights to
realize upon its security and retain sufficient funds to cover amounts
outstanding by way of these instruments.
20. Periodic Review:
Segment (1) of the Credit Facility is subject to annual review by the Bank,
the next such review to be on or before September 30, 1999. The Bank may,
in its sole discretion, terminate this segment of the facilities following
any annual review or any Event of Default, or a demand for payment should
Segment (1) have converted to a demand facility. If this segment is so
terminated, any outstanding Borrowings under it at the time of termination
shall be repaid forthwith. Furthermore, the Borrower shall immediately pay
to the Bank all Borrowings under Segments (2) and (3) of this agreement
including the face amount of all L/G's and an amount to reimburse the Bank
for any payment made in respect of FEF Contracts (the "Repayment Amount").
The Repayment Amount shall be determined by the Bank based upon the
mark-to-market cost to unwind such FEF Contracts prior to their maturity.
The Bank may enforce its rights to realize upon its security and retain
sufficient funds to cover amounts outstanding by way of these instruments.
21. Expenses:
The Borrower agrees to pay all of the Bank's reasonable costs incurred from
time to time in the preparation, negotiation and execution of this
agreement and the collateral security, and any costs incurred in the
operation or enforcement of this agreement or any other agreement entered
into pursuant to this agreement.
22. GAAP:
Unless otherwise provided, all accounting terms used in this agreement
shall be interpreted in accordance with United States Generally Accepted
Accounting Principles from time to time.
23. Severability:
If any provision of this agreement is or becomes prohibited or
unenforceable in any jurisdiction, such prohibition or unenforceability
shall not invalidate or render unenforceable the provision concerned in any
other jurisdiction nor shall it invalidate, affect or impair any of the
remaining provisions.
24. Governing Law:
This agreement shall be construed in accordance with and governed by the
laws of the Province of Ontario and of Canada applicable therein.
25. Acceptance:
This offer expires if not accepted by April 21, 1999 unless extended in
writing by the Bank.
If this agreement is acceptable, kindly sign and return the attached copy
to the attention of the writer.
Yours truly,
We acknowledge and accept the within terms and conditions.
JETFORM CORPORATION
Per: ______________________________________________
Per: ______________________________________________
Date: ______________________________________________
<PAGE>
SCHEDULE "A"
Schedule "A" to the Letter Agreement dated as of the 7th day of April, 1999
between JetForm Corporation as the Borrower and Royal Bank of Canada as the
Bank.
For purposes of the foregoing agreement, the following terms and phrases
shall have the following meanings:
"Banking Day" means a Business Day on which the Bank's Main Branch in
London, England, is open for business;
"Business Day" means a day on which the Branch of Account is open for
business;
"Canadian Dollars" and "Cdn$" means lawful money of Canada;
"Equivalent Amount" determines the amount of availability only and means on
any date, the amount of Canadian Dollars required to convert from Canadian
Dollars to: US Dollars at the rate of 1.52 Canadian Dollars for 1.00 US$;
The Equivalent Amount will be amended by the Bank from time to time to
reflect changes in the rate of exchange and such amendments will be advised to
the Borrower in writing.
"Libor" means the rates of interest, rounded upwards, if necessary, to the
nearest whole multiple of one sixteenth of one percent (1/16th%), at which the
Bank, in accordance with its normal practice, would be prepared to offer
deposits to leading banks in the London Interbank Market for delivery on the
first day of each of the relative Libor Interest Periods for a period equal to
each such Libor Interest Period based on the number of days comprised therein,
such deposits being in US Dollars of comparable amounts to be outstanding during
such Libor Interest Period, at or about 10:00 a.m. (Toronto time) two (2)
Banking Days prior to a Drawdown Date or a Conversion Date as the case may be,
for the initial Libor Interest Period, and, thereafter two (2) Banking Days
prior to the first day of each successive Libor Interest Period;
"Libor Interest Date" means the last day of each Libor Interest Period and
if the Borrower selects a Libor Interest Period for a period longer than 3
months, the Libor Interest Date shall be the date falling every 3 months after
the beginning of such Libor Interest Period and on the last day of such Libor
Interest Period;
"Libor Interest Period" means with respect to a Libor Loan the initial
period (subject to availability) of approximately 1, 3, 6, or 9 months or one
year or such longer period up to 5 years as the Bank and Borrower may agree,
commencing with the date on which a Libor Loan is made or on which another basis
of borrowing is converted into a Libor Loan and ending on the Libor Interest
Date falling on the last day of the applicable Libor Interest Period, and
thereafter each successive period (subject to availability) of approximately 3,
6, or 9 months or one year or such longer period up to 5 years as the Bank and
Borrower may agree, commencing on the last day of the immediately prior Libor
Interest Period;
"Material Subsidiary" means any subsidiary which comprises 20% or more of
consolidated revenues (determined on the basis of the most recent four fiscal
quarters) or consolidated assets (at any fiscal quarter end).
<PAGE>
SCHEDULE "B"
Schedule "B" to the Letter Agreement dated the 7th day of April, 1999
between JetForm Corporation as Borrower and Royal Bank of Canada as the Bank.
OFFICER'S COMPLIANCE CERTIFICATE
I, [Name], of the [City] of in the Province of , hereby - - certify as
follows:
1. That I am the Chief Financial Officer of JetForm Corporation.
2. That I am familiar with and have examined the provisions of the letter
agreement (the "Letter Agreement") dated April 7, 1999 between JetForm
Corporation (the "Borrower"), and Royal Bank of Canada (the "Bank") and
have made reasonable investigations of corporate records and inquiries of
other officers and senior personnel of the Borrower and, based on the
foregoing, that as of the date of this Certificate:
(a) the representations and warranties contained in the Letter Agreement
are true and correct;
(b) the Borrower is not in default under the Letter Agreement nor has any
event occurred which, with the giving of notice or the passage of time
or both, would constitute an Event of Default under the Letter
Agreement and the Borrower is not in default under any other material
agreement for monies borrowed, raised, or guaranteed to which the
Borrower is a party or by which it is bound; and
(c) the covenants contained in the Letter Agreement have not been breached
and during the next fiscal quarter of the Borrower there is no reason
to believe that any of such covenants will be breached;
(d) the attached list of receivables and Potential Preferred Claims is
correct.
3. That, as at the fiscal [year/quarter] ended [date], on a consolidated
basis:
(a) the Quick Ratio was :1;
(b) the Tangible Net Worth was ;
(c) the ratio of total liabilities to Tangible Net Worth was :1; (d) the
Available Margin Value was $ .
--------------------------------------
Date: ________________
Exhibit 10.27
THIS AMENDMENT dated as of the 28th day of September, 1998 to the
Employment Agreement made as of August 11, 1994 (the "Employment Agreement") by
and between JETFORM CORPORATION, a corporation incorporated pursuant to the laws
of Canada ("JetForm") and JOHN GLEED ("Executive").
WHEREAS JetForm and Executive wish to amend certain provisions of the
Employment Agreement and make certain further agreements, in each case as set
forth below;
NOW THEREFORE in consideration of the mutual covenants and agreements
contained in this Amendment and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged) the parties hereto
agree as follows:
ARTICLE 1. INTERPRETATION
1.01 Unless otherwise specified, all capitalized terms used in this
Addendum and not otherwise defined in this Amendment shall have the
meanings given to them in the Employment Agreement. Where reference is
made in this Amendment to a section number, it shall refer to a
section number in the Employment Agreement. Except as amended hereby,
the parties confirm that the Employment Agreement remains in full
force and effect in accordance with the terms thereof and the terms
not hereby amended shall apply to this Amendment as though stated
herein.
ARTICLE 2. AMENDMENTS TO EMPLOYMENT AGREEMENT
2.01 Additional Duties. The Corporation and the Executive hereby agree to
delete the period and add the word "and" following clause (c) of
Section 2.1 and add the following clause (d) to Section 2.1:
"(d) use diligent efforts to observe in all material respects the
material rules, regulations and policies of the Corporation applicable
to the Executive, (including without limitation the Corporation's
policies respecting insider trading) from time to time in force which
are brought to the attention of the Executive or which he should
reasonably be aware."
2.02 Change of Control. The Corporation and the Executive hereby agree that
the following clause (d) shall be added to Section 3.1:
"(d) Change of Control. The parties agree that this Agreement will not
automatically terminate upon (i) any sale of all or substantially all
of the assets of the Corporation or (ii) any change of voting control
of the Corporation, whether by way of share acquisition, merger
amalgamation, plan of arrangement or otherwise. However, the
Corporation and the Executive acknowledge and agree that both the
Corporation (or its successor) and the Executive shall have the right
to terminate this Agreement within ninety days of the legal closing of
the change event, on thirty days notice to the other party. If the
Executive's employment is so terminated.
(i) the Corporation shall pay to or to the order of the
Executive the aggregate of the following amounts (less any
deductions required by law):
(A) if not theretofore paid, the Executive's Annual
Salary for the then current fiscal year of the
Corporation for the period to and including the
Date of Termination; and
(B) an amount equal to the Annual Salary times 1.25;
(ii) all options held by the Executive, whether then vested or
not, shall immediately become exercisable (and shall remain
exercisable as set forth in clause 3.1(c)(ii)) in the event
that the Executive's employment is terminated by the
Corporation (other than for Just Cause, Disability or Death)
within one year following the acquisition by a third party
of greater than 50% of the then issued and outstanding
JetForm common shares;
(iii) the Corporation shall not seek in any way to amend the terms
of any loans from the Corporation or its subsidiaries to the
Executive;
(iv) the Corporation shall provide the Executive with the job
relocation counselling services of the firm acceptable to
the Corporation for an amount not to exceed $30,000;
(v) if, at the Date of Termination, there were any memberships
in any clubs, social or athletic organizations paid for by
the Corporation that were for the regular use of the
Executive at the Date of Termination, the Corporation will
not take any action to terminate such memberships but need
not renew any such membership that expires; and
(vi) the Corporation shall pay to the Executive all outstanding
and accrued vacation pay to the Date of Termination."
2.03 Amendment to Payment and Benefit Requirements following Termination.
The last sentence of Section 3.3 of the Employment Agreement is
deleted and replaced with the following:
"If the Executive secures employment after the Date of Termination and
prior to receiving all amounts owing hereunder, the Executive shall
immediately inform the Corporation and the Corporation shall have the
right to terminate all health, life and disability benefits being
carried by the Corporation for the Executive."
2.04 Amendment to Board Resignation Provision. The parties agree that the
Executive shall not be required to resign from the board of directors
of the Corporation upon the termination of the Executive's employment.
Accordingly, Section 5.2 is hereby deleted in its entirety and
replaced with the following:
"5.2 The Executive agrees that after termination of his employment for
whatever reason, he will tender his resignation from any position he
may hold as an officer of the Corporation or as an officer or director
of any of its affiliated or associated companies, provided that doing
so will not reduce the obligations of the Corporation described
herein."
ARTICLE 3. GENERAL
A. Independent Legal Advice. The Executive acknowledges that he has had an
opportunity to obtain independent legal advice before signing this
Amendment and agrees that either such advice has been obtained or that he
does not wish to seek or obtain such independent legal advice. The
Executive acknowledges that he has read this Amendment and fully
understands the nature and effect of it and the terms contained herein and
that the said terms are fair and reasonable and correctly set out the
Executive's intentions.
B. Address for Notice. Until changed in accordance therewith, the Executive's
address for notice as set forth in Section 5.5 of the Employment Agreement
shall be:John Gleed13679 Fontenay CrescentOttawa, OntarioK1V 7K5
C. Governing Law. This Amendment shall be governed by the laws of the Province
of Ontario and the federal
IN WITNESS WHEREOF the parties have executed this Amendment.
JETFORM CORPORATION
By:
--------------------------------
Authorized Officer
- ------------------------------- -----------------------------------
Witness JOHN GLEED
Exhibit 10.28
THIS AMENDMENT dated as of the 26th day of September, 1998 to the
Employment Agreement made as of August 11, 1994 (the "Employment Agreement") by
and between JETFORM CORPORATION, a corporation incorporated pursuant to the laws
of Canada ("JetForm") and JOHN B. KELLY ("Executive").
WHEREAS JetForm and Executive wish to amend certain provisions of the
Employment Agreement and make certain further agreements, in each case as set
forth below;
NOW THEREFORE in consideration of the mutual covenants and agreements
contained in this Amendment and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged) the parties hereto
agree as follows:
ARTICLE 1. INTERPRETATION
1.01 Unless otherwise specified, all capitalized terms used in this
Addendum and not otherwise defined in this Amendment shall have the
meanings given to them in the Employment Agreement. Where reference is
made in this Amendment to a section number, it shall refer to a
section number in the Employment Agreement. Except as amended hereby,
the parties confirm that the Employment Agreement remains in full
force and effect in accordance with the terms thereof and the terms
not hereby amended shall apply to this Amendment as though stated
herein.
ARTICLE 2. AMENDMENTS TO EMPLOYMENT AGREEMENT
2.01 Additional Duties. The Corporation and the Executive hereby agree to
delete the period and add the word "and" following clause (c) of
Section 2.1 and add the following clause (d) to Section 2.1:
"(d) use diligent efforts to observe in all material respects the
material rules, regulations and policies of the Corporation applicable
to the Executive, (including without limitation the Corporation's
policies respecting insider trading) from time to time in force which
are brought to the attention of the Executive or which he should
reasonably be aware."
2.02 Amendment to Termination Payment. The Corporation and Executive agree
that the amount payable by the Corporation to the Executive upon
termination of the Executive's employment by the Corporation for
reasons other than Just Cause, Disability, retirement or death or by
the Executive for Good Reason should be increased from 1.25 times
Annual Salary to 3 times Annual Salary. Accordingly, the reference to
"1.25" in clause 3.1(c)(i)(B) is hereby deleted and replaced with "3".
2.03 Change of Control. The Corporation and the Executive hereby agree that
the following clause (d) shall be added to Section 3.1:
"(d) Change of Control. The parties agree that this Agreement will not
automatically terminate upon (i) any sale of all or substantially all
of the assets of the Corporation or (ii) any change of voting control
of the Corporation, whether by way of share acquisition, merger
amalgamation, plan of arrangement or otherwise. However, the
Corporation and the Executive acknowledge and agree that both the
Corporation (or its successor) and the Executive shall have the right
to terminate this Agreement within ninety days of the legal closing of
the change event, on thirty days notice to the other party. If the
Executive's employment is so terminated.
(i) the Corporation shall pay to or to the order of the
Executive the aggregate of the following amounts (less any
deductions required by law):
(A) if not theretofore paid, the Executive's Annual
Salary for the then current fiscal year of the
Corporation for the period to and including the
Date of Termination; and
(B) an amount equal to the product obtained by
multiplying the Annual Salary by 3;
(ii) all options held by the Executive, whether then vested or
not, shall immediately become exercisable (and shall remain
exercisable as set forth in clause 3.1(c)(ii)) in the event
that the Executive's employment is terminated by the
Corporation (other than for Just Cause, Disability or Death)
within one year following the acquisition by a third party
of greater than 50% of the then issued and outstanding
JetForm common shares;
(iii) the Corporation shall not seek in any way to amend the terms
of any loans from the Corporation or its subsidiaries to the
Executive;
(iv) the Corporation shall provide the Executive with the job
relocation counselling services of the firm acceptable to
the Corporation for an amount not to exceed $30,000;
(v) if, at the Date of Termination, there were any memberships
in any clubs, social or athletic organizations paid for by
the Corporation that were for the regular use of the
Executive at the Date of Termination, the Corporation will
not take any action to terminate such memberships but need
not renew any such membership that expires; and
(vi) the Corporation shall pay to the Executive all outstanding
and accrued vacation pay to the Date of Termination."
2.04 Amendment to Payment and Benefit Requirements following Termination.
The last sentence of Section 3.3 of the Employment Agreement is
deleted and replaced with the following:
"If the Executive secures employment after the Date of Termination and
prior to receiving all amounts owing hereunder, the Executive shall
immediately inform the Corporation and the Corporation shall have the
right to terminate all health, life and disability benefits being
carried by the Corporation for the Executive."
A. Amendment to Duration of Non-Compete/Non-Solicitation. In
consideration of the amendment to the termination payment as set forth
in Section 2.02 above, the Corporation and Executive agree that the
duration of the non-compete and non-solicitation covenants contained
in Sections 4.1 and 4.2 of the Employment Agreement shall be extended
so as to apply for a period of three years following the Date of
Termination. Accordingly, the reference to "18 months" in each of
Sections 4.1 and 4.2 is hereby deleted and replaced with "36 months".
2.06 Amendment to Board Resignation Provision. The parties agree that the
Executive shall not be required to resign from the board of directors
of the Corporation upon the termination of the Executive's employment.
Accordingly, Section 5.2 is hereby deleted in its entirety and
replaced with the following:
"5.2 The Executive agrees that after termination of his employment for
whatever reason, he will tender his resignation from any position he
may hold as an officer of the Corporation or as an officer or director
of any of its affiliated or associated companies, provided that doing
so will not reduce the obligations of the Corporation described
herein."
ARTICLE 3. GENERAL
3.01 Independent Legal Advice. The Executive acknowledges that he has had
an opportunity to obtain independent legal advice before signing this
Amendment and agrees that either such advice has been obtained or that
he does not wish to seek or obtain such independent legal advice. The
Executive acknowledges that he has read this Amendment and fully
understands the nature and effect of it and the terms contained herein
and that the said terms are fair and reasonable and correctly set out
the Executive's intentions.
3.02 Address for Notice. Until changed in accordance therewith, the
Executive's address for notice as set forth in Section 5.5 of the
Employment Agreement shall be:
John B. Kelly
23 Hyde Park Way
Nepean, Ontario K2G 5R7
3.03 Governing Law. This Amendment shall be governed by the laws of the
Province of Ontario and the federal laws of Canada applicable therein.
IN WITNESS WHEREOF the parties have executed this Amendment.
JETFORM CORPORATION
By:
-------------------------------------
Authorized Officer
- ------------------------------- ----------------------------------------
Witness JOHN B. KELLY
Exhibit 10.29
THIS AMENDMENT dated as of the 25th day of September, 1998 to the
Employment Agreement made as of August 11, 1994 (the "Employment Agreement") by
and between JETFORM CORPORATION, a corporation incorporated pursuant to the laws
of Canada ("JetForm") and PHILIP WEAVER ("Executive").
WHEREAS JetForm and Executive wish to amend certain provisions of the
Employment Agreement and make certain further agreements, in each case as set
forth below;
NOW THEREFORE in consideration of the mutual covenants and agreements
contained in this Amendment and other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged) the parties hereto
agree as follows:
ARTICLE 1. INTERPRETATION
1.01 Unless otherwise specified, all capitalized terms used in this
Addendum and not otherwise defined in this Amendment shall have the
meanings given to them in the Employment Agreement. Where reference is
made in this Amendment to a section number, it shall refer to a
section number in the Employment Agreement. Except as amended hereby,
the parties confirm that the Employment Agreement remains in full
force and effect in accordance with the terms thereof and the terms
not hereby amended shall apply to this Amendment as though stated
herein.
ARTICLE 2. AMENDMENTS TO EMPLOYMENT AGREEMENT
2.01 Additional Duties. The Corporation and the Executive hereby agree to
delete the period and add the word "and" following clause (c) of
Section 2.1 and add the following clause (d) to Section 2.1:
"(d) use diligent efforts to observe in all material respects the
material rules, regulations and policies of the Corporation applicable
to the Executive, (including without limitation the Corporation's
policies respecting insider trading) from time to time in force which
are brought to the attention of the Executive or which he should
reasonably be aware."
2.02 Amendment to Termination Payment. The Corporation and Executive agree
that the amount payable by the Corporation to the Executive upon
termination of the Executive's employment by the Corporation for
reasons other than Just Cause, Disability, retirement or death or by
the Executive for Good Reason should be increased from 1.25 times
Annual Salary to 2 times Annual Salary. Accordingly, the reference to
"1.25" in clause 3.1(c)(i)(B) is hereby deleted and replaced with "2".
2.03 Change of Control. The Corporation and the Executive hereby agree that
the following clause (d) shall be added to Section 3.1:
"(d) Change of Control. The parties agree that this Agreement will not
automatically terminate upon (i) any sale of all or substantially all
of the assets of the Corporation or (ii) any change of voting control
of the Corporation, whether by way of share acquisition, merger
amalgamation, plan of arrangement or otherwise. However, the
Corporation and the Executive acknowledge and agree that both the
Corporation (or its successor) and the Executive shall have the right
to terminate this Agreement within ninety days of the legal closing of
the change event, on thirty days notice to the other party. If the
Executive's employment is so terminated.
(i) the Corporation shall pay to or to the order of the
Executive the aggregate of the following amounts (less any
deductions required by law):
(A) if not theretofore paid, the Executive's Annual
Salary for the then current fiscal year of the
Corporation for the period to and including the
Date of Termination; and
(B) an amount equal to the product obtained by
multiplying the Annual Salary by 2;
(ii) all options held by the Executive, whether then vested or
not, shall immediately become exercisable (and shall remain
exercisable as set forth in clause 3.1(c)(ii)) in the event
that the Executive's employment is terminated by the
Corporation (other than for Just Cause, Disability or Death)
within one year following the acquisition by a third party
of greater than 50% of the then issued and outstanding
JetForm common shares;
(iii) the Corporation shall not seek in any way to amend the terms
of any loans from the Corporation or its subsidiaries to the
Executive;
(iv) the Corporation shall provide the Executive with the job
relocation counselling services of the firm acceptable to
the Corporation for an amount not to exceed $30,000;
(v) if, at the Date of Termination, there were any memberships
in any clubs, social or athletic organizations paid for by
the Corporation that were for the regular use of the
Executive at the Date of Termination, the Corporation will
not take any action to terminate such memberships but need
not renew any such membership that expires; and
(vi) the Corporation shall pay to the Executive all outstanding
and accrued vacation pay to the Date of Termination."
2.04 Amendment to Payment and Benefit Requirements following Termination.
The last sentence of Section 3.3 of the Employment Agreement is
deleted and replaced with the following:
"If the Executive secures employment after the Date of Termination and
prior to receiving all amounts owing hereunder, the Executive shall
immediately inform the Corporation and the Corporation shall have the
right to terminate all health, life and disability benefits being
carried by the Corporation for the Executive."
2.05 Amendment to Duration of Non-Compete/Non-Solicitation. In
consideration of the amendment to the termination payment as set forth
in Section 2.02 above, the Corporation and Executive agree that the
duration of the non-compete and non-solicitation covenants contained
in Sections 4.1 and 4.2 of the Employment Agreement shall be extended
so as to apply for a period of two years following the Date of
Termination. Accordingly, the reference to "18 months" in each of
Sections 4.1 and 4.2 is hereby deleted and replaced with "24 months".
ARTICLE 3. GENERAL
3.01 Independent Legal Advice. The Executive acknowledges that he has had
an opportunity to obtain independent legal advice before signing this
Amendment and agrees that either such advice has been obtained or that
he does not wish to seek or obtain such independent legal advice. The
Executive acknowledges that he has read this Amendment and fully
understands the nature and effect of it and the terms contained herein
and that the said terms are fair and reasonable and correctly set out
the Executive's intentions.
3.02 Governing Law. This Amendment shall be governed by the laws of the
Province of Ontario and the federal laws of Canada applicable therein.
IN WITNESS WHEREOF the parties have executed this Amendment.
JETFORM CORPORATION
By:
-------------------------------------
Authorized Officer
- ------------------------------- ----------------------------------------
Witness PHILIP WEAVER
Exhibit 10.3
September 22, 1998
Carlos Fox
c/o JetForm Corporation
560 Rochester Street
Ottawa, Ontario
K1S 5K2
Re: Employment Agreement
We are pleased to confirm the terms and conditions of the employment of
Carlos Fox ("you" or the "Executive") with JetForm Corporation (the
"Corporation"). The Corporation believes that it is reasonable and fair to the
Corporation that you receive fair treatment in the event of the termination
without cause or adverse modification without cause of your employment. In
consideration thereof, and by your execution of this Agreement below, you wish
to abide by various non-competition and confidentiality restrictions contained
herein, your violation of which would be highly detrimental to the Corporation,
and both you and the Corporation wish formally to agree as to the terms and
conditions contained herein that will govern the termination or modification of
your employment.
Article I - Preamble and Interpretation
1.0 The parties agree that the Executive's original date of employment
with the corporation for the purposes of this agreement is July 15,
1996.
1.1 The parties agree, and represent and warrant to each other, that the
above preamble is true and accurate and is incorporated into the terms
of this Agreement.
1.2 The headings of the Articles, sections, subsections and clauses herein
are inserted for convenience of reference only and shall not affect
the meaning or construction hereof.
1.3 For the purposes of this Agreement, the following terms shall have the
following meanings, respectively:
(a) "Annual Salary" means the sum of:
(i) the annual salary of the Executive, payable to the
Executive by the Corporation at the Date of
Termination or as at the end of the month
immediately preceding the month in which
termination occurs (the "Prior Month"), whichever
is greater, and if an annual salary has not been
established, it shall be calculated by multiplying
the monthly salary of the Executive in effect for
the Prior Month by 12; and
(ii) the aggregate amount of all remuneration,
salaries, bonuses and benefits (including, without
limitation, health, dental and disability
coverage) not included in clause (i) above that
the board of directors of the Corporation acting
reasonably estimates would be payable to the
Executive during the 12 month period following the
termination of the Executive's employment by the
Corporation assuming: (1) the employment of the
Executive was not terminated during such period;
and (2) the Executive benefited from and
participated in such remuneration, salaries,
bonuses and benefits on a basis consistent with
practices in effect for senior executives of the
Corporation immediately prior to the Date of
Termination;
(b) "Date of Termination" shall mean the date of termination of
the Executive's employment, whether by the Executive or by
the Corporation or by death of the Executive;
(c) "Disability" shall mean the Executive's failure to
substantially perform his duties on a full-time basis for a
period of six months out of any 18-month period, where such
failure is a result of physical or mental illness;
(d) "Good Reason" shall include, without limitation, the
occurrence of any of the following without the Executive's
written consent (except in connection with the termination
of the employment of the Executive for Just Cause or
Disability):
(i) a material reduction by the Corporation of the
Executive's salary, benefits or any other form of
remuneration or any change in the basis upon which
the Executive's salary, benefits or any other form
of remuneration payable by the Corporation is
determined other than a reduction or change in a
manner which is consistent with industry practices
generally in effect prior to such reduction or
change.
(ii) any failure by the Corporation to continue in
effect any substantive benefit, bonus, profit
sharing, incentive, remuneration or compensation
plan, pension plan or retirement plan in which the
Executive was participating or entitled to
participate immediately prior to such failure
other than a failure to continue such benefits,
bonuses or plans on a basis consistent with
industry practices generally in effect prior to
such failure, or the Corporation taking any action
or failing to take any action, the failure of
which would adversely affect the Executive's
participation in or reduce his rights or benefits
under or pursuant to any such plan other than an
action or failure to take an action on a basis
consistent with industry practices generally in
effect prior to such action or failure, or the
Corporation failing to increase or improve such
rights or benefits on a basis consistent with
industry practices generally in effect prior to
such failure; or
(iii) any material breach by the Corporation of any
provision of this Agreement; or
(iv) the failure by the Corporation to obtain, in a
form satisfactory to the Executive acting
reasonably, an effective assumption of its
obligations hereunder by any successor to the
Corporation, including a successor to a material
portion of its business; and
(g) "Just Cause" shall mean:
(i) gross insubordination;
(ii) the continued failure or refusal by the Executive
to substantially perform his duties according to
the terms of his employment, after the Corporation
has given the Executive notice of such failure or
refusal and a reasonable opportunity to correct
it, except where such acts or omissions by the
Executive:
(A) follow an event defined herein as "Good
Reason"; or
(B) result from the Executive's Disability.
(iii) dishonesty by the Executive affecting the
Corporation;
(iv) use by the Executive of drugs or of alcohol in a
manner which materially affects his ability to
perform his employment duties;
(v) any improper act by the Executive that the
Executive knows or should reasonably know is
substantially inconsistent with his duties as an
Executive; or
(vi) any criminal act of dishonesty by the Executive
resulting or intended to result directly or
indirectly in personal gain of the Executive at
the Corporation's expense.
Article II - Duties and Compensation
2.1 The Executive shall serve the Corporation and any subsidiaries of the
Corporation in such capacity or capacities and shall perform such
duties and exercise such powers pertaining to the management and
operation of the Corporation and any subsidiaries of the Corporation
as may be determined from time to time by the board of directors of
the Corporation consistent with the office of the Executive. The
Executive shall:
(a) devote his full time and attention and his reasonable best
efforts during normal business hours to the business and
affairs of the Corporation;
(b) perform those duties that may reasonably be assigned to the
Executive diligently and faithfully to the best of the
Executive's abilities and in the best interests of the
Corporation;
(c) faithfully observe and abide by all the rules, regulations
and policies of the Corporation applicable to the Executive,
(including without limitation the Corporation's policies
respecting insider trading) from time to time in force which
are brought to the attention of the Executive or which he
should reasonably be aware; and
(d) use his reasonable best efforts to promote the interests and
goodwill of the Corporation.
2.2 Subject to Article 3 hereof, the Annual Salary payable to the
Executive shall be determined during the annual review process by the
direct line reporting executive and approved where applicable by the
Chief Operating Officer, the President, or the Compensation Committee
of the Board of Directors.
2.3 The Executive shall also be entitled to receive the vacation and
benefits set forth on a basis consistent with the company practice
generally in effect for other executives of the corporation which
benefits may be amended from time to time by the Corporation but
subject always to the provisions of Article 3 hereof.
Article III - Obligations of the Corporation upon Termination
3.1 The Corporation shall have the following obligations in the event that
the Executive's employment is terminated:
(a) Death, Disability or Retirement. If the Executive's
employment is terminated by reason of the Executive's death,
Disability or retirement, the Executive or the Executive's
family, as the case may be, shall be entitled to receive
benefits in a manner consistent with and at least equal in
amount to those made available by the Corporation to senior
executives or surviving families of the senior executives of
the Corporation under such plans, programs and policies
relating to (i) family death benefits, if any, as are in
effect at the date of the Executive's death; or (ii)
Disability or retirement, if any, as are in effect at the
Date of Termination, as the case may be.
(b) Termination by the Corporation for Just Cause and
Termination by the Executive Other Than for Good Reason. If
the Executive's employment is terminated by the Corporation
for Just Cause, or is terminated by the Executive other than
for Good Reason, the Corporation shall pay to the Executive,
if not theretofore paid, the fraction of the Annual Salary
and vacation pay, if any, earned by or payable to the
Executive by the Corporation during the then current fiscal
year of the Corporation for the period to and including the
Date of Termination, and the Corporation shall not have any
further obligations to the Executive under this Agreement or
otherwise.
(c) Termination by the Corporation Other Than for Just Cause,
Disability or Death and Termination by the Executive for
Good Reason. Either party must give 60 days written notice
of such termination. If the Executive's employment is
terminated by the Corporation other than for Just Cause,
Disability, retirement or death or is terminated by the
Executive for Good Reason:
(i) the Corporation shall pay to or to the order of
the Executive the aggregate of the following
amounts (less any deductions required by law):
(A) if not theretofore paid, the Executive's
Annual Salary for the then current
fiscal year of the Corporation for the
period to and including the Date of
Termination; and
(B) an amount equal to the annual salary;
(ii) subject to the provisions of Section 9 of the 1995
Stock Option Plan and Section 16 of the 1993 Stock
Option Plan, the Corporation shall ensure that all
options to acquire common shares of the
Corporation held by the Executive on the Date of
Termination shall continue to vest and be
exercisable for the full period during which
Executive is compensated by the Corporation as set
forth in Section 3.2. As of the last day of such
period, the executive shall have 30 days to
exercise all vested options. On the 31st day, all
unexercised options vested or unvested are
cancelled. Notwithstanding the foregoing, all
options held by the Executive, whether then vested
or not, shall immediately become exercisable (and
shall remain exercisable for the period of thirty
days following the Date of Termination in the
event that the Executive's employment is
terminated by the Corporation (other than for Just
Cause, Disability or Death) within one year
following: the acquisition by any third party of
greater than 50% of the then issued and
outstanding JetForm common shares.
(iii) the Corporation shall not seek in any way to amend
the terms of any loans from the Corporation or its
subsidiaries to the Executive;
(iv) the Corporation shall provide the Executive with
the job relocation counselling services of the
firm acceptable to the Corporation for an amount
not to exceed $15,000;
(v) if, at the Date of Termination, there were any
memberships in any clubs, social or athletic
organizations paid for by the Corporation that
were for the regular use of the executive at the
Date of Termination, the Corporation will not take
any action to terminate such memberships but need
not renew any such membership that expires; and
(vi) the Corporation shall pay to the Executive all
outstanding and accrued vacation pay to the Date
of Termination.
Upon compliance with clauses (c)(i) through (vi) above, the
Corporation shall have no further obligations to the Executive under
this Agreement or otherwise and the Executive agrees that
notwithstanding any other provision contained herein, the Executive
shall not have any right to commence any action for wrongful dismissal
or termination.
3.2 The benefits payable under this Article III shall be paid as follows:
(a) with respect to that portion of the Annual Salary relating to
salary and related benefits of the Executive, at the Corporation's
regular pay periods and (b) with respect to all other amounts, on a
basis consistent with practices in effect immediately prior to the
Date of Termination. If the Executive secures employment after the
Date of Termination and prior to receiving all amounts owing
hereunder, the Executive shall immediately inform the Corporation and
the Corporation shall have the right to terminate all health, life and
disability benefits being carried by the Corporation for the
Executive.
Article IV - Non-Competition, Confidentiality and Inventions and Patents
4.1 The Executive shall not while an Executive of the Corporation and for
a period of 12 months following the Date of Termination, for any
reason whatsoever, anywhere in North America, directly or indirectly,
either individually or in partnership, or in conjunction with any
other persons or corporations as principal, agent, shareholder,
employee, advisor, lender, guarantor or in any other capacity
whatsoever:
(a) carry on or be engaged in or be connected with or interested
in or receive royalties or other compensation from a segment
of any business which is directly or indirectly competitive
with the business of the Corporation or any of its
subsidiaries; or
(b) contact or solicit any designated customers of the
Corporation or any of its subsidiaries for the purposes of
selling to the designated customers any products or services
which are the same as or are competitive with, the products
or services sold by the Corporation or any of its
subsidiaries during the term of this Agreement. For the
purpose of this section, a designated customer means any
person or entity who was a customer of the Corporation or
any of its subsidiaries while the Executive was an Executive
of the Corporation.
Notwithstanding the foregoing, the Executive may hold up to five per
cent of the issued and outstanding securities of any publicly traded
company.
4.2 The Executive shall not while an Executive of the Corporation and for
a period of 12 months thereafter, directly or indirectly, employ or
retain as an independent contractor any employee of the Corporation or
any of its subsidiaries or induce or solicit, or intend to induce, any
such person to leave his/her employment.
4.3 The Executive acknowledges and agrees that:
(a) in the course of performing his duties and responsibilities
as an officer of the Corporation, he has had and will
continue in the future to have access to and has been and
will be entrusted with detailed confidential information and
trade secrets (printed or otherwise) concerning past,
present, future and contemplated products, services,
operations and marketing techniques and procedures of the
Corporation and its subsidiaries, including, without
limitation, information relating to past, present and
prospective clients, customers, suppliers and employees of
the Corporation and its subsidiaries (collectively "Trade
Secrets"), the disclosure of any of which to competitors of
the Corporation or to the general public, or the use of same
by the Executive or any competitor of the Corporation or any
of its subsidiaries, would be highly detrimental to the
interests of the Corporation;
(b) the Executive, while an officer and/or employee of the
Corporation, owes fiduciary duties to the Corporation,
including the duty to act in the best interests of the
Corporation; and
(c) the right to maintain the confidentiality of the Trade
Secrets, the right to preserve the goodwill of the
Corporation and the right to the benefit of any
relationships that have developed between the Executive and
the customers, clients and suppliers of the Corporation by
virtue of the Executive's employment with the Corporation
constitute proprietary rights of the Corporation, which the
Corporation is entitled to protect.
In acknowledgement of the matters described above, the Executive
hereby agrees that he will not, during the term of this Agreement or
any time thereafter following the termination of employment for any
reason, directly or indirectly disclose to any person or in any way
make use of (other than for the benefit of the Corporation), in any
manner, any of the Trade Secrets, provided that such Trade Secrets
shall be deemed not to include information that is or becomes
generally available to the public other than as a result of disclosure
by the Executive.
4.4 Any invention (whether patentable or otherwise), improvement, device,
industrial design, copyright, know-how or other intellectual or
industrial property developed, invented, created or improved by the
Executive during the term of this Agreement or prior to the date
hereof while the Executive was employed by the Corporation in respect
of the Corporation's business (collectively, the "Intellectual
Property") shall be the exclusive property of the Corporation. The
Corporation shall have the exclusive right to file patent applications
and to obtain patents, to register industrial designs and copyright in
the name of the Corporation in connection with the Intellectual
Property. The Executive shall execute, from time to time, upon request
by the Corporation, assignments of the Executive's rights in the
Intellectual Property to the Corporation, shall co-operate with the
Corporation in documenting the ownership of the Intellectual Property
by the Corporation, and shall provide all necessary assistance in the
filing and prosecution of any applications to register the
Intellectual Property. The Executive hereby waives his moral rights to
the Intellectual Property at common law and under section 14.1 of the
Copyright Act or successor provisions from time to time, which are
acknowledged to include the right to the integrity of the Intellectual
Property and the right, where reasonable in the circumstances, to be
associated with the Intellectual Property or an author by name or
under a pseudonym and the right to remain anonymous when any
translation of the Intellectual Property is produced, performed or
published.
4.5 The Executive acknowledges that a breach or threatened breach by the
Executive of the provisions of any of this Article 4 will result in
the Corporation and its shareholders suffering irrevocable harm which
is not capable of being calculated and which cannot be fully or
adequately compensated by the recovery of damages alone. Accordingly,
the Executive agrees that the Corporation shall be entitled to interim
and permanent injunctive relief, specific performance and other
equitable remedies, in addition to any other relief to which the
Corporation may be entitled.
Article V- General
5.1 The Executive acknowledges that he has had an opportunity to obtain
independent legal advice before signing this Agreement and agrees that
either such advice has been obtained or that he does not wish to seek
or obtain such independent legal advice. The Executive acknowledges
that he has read this Agreement and fully understands the nature and
effect of it and the terms contained herein and that the said terms
are fair and reasonable and correctly set out the Executive's position
in the event of termination.
5.2 The Executive agrees that after termination of his employment for
whatever reason, he will tender his resignation from any position he
may hold as an officer of the Corporation or as an officer or director
of any of its affiliated or associated companies, provided that doing
so will not reduce the obligations of the Corporation described
herein.
5.3 If any provision of this Agreement is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or
impair the validity of any other provision herein and each such
provision is deemed to be separate, distinct and severable.
5.4 Any notice required or permitted to be given under this Agreement
shall be in writing and shall be properly given if delivered by hand
or mailed by prepaid registered mail addressed as follows:
(a) in the case of the Corporation, to:
JetForm Corporation
560 Rochester Street
Ottawa, Ontario
K1S 5K2
Attention: Chief Executive Officer
(b) in the case of the Executive, to:
Carlos Fox
c/o JetForm Corporation
or to such other address as the parties may from time to time specify
by notice given in accordance herewith. Any notice so given shall be
conclusively deemed to have been given or made on the day of delivery,
if delivered, or if mailed by registered mail, upon the date shown on
the postal return receipt as the date upon which the envelope
containing such notice was actually received by the addressee provided
in the event of mail disruption, delivery may only be made by hand.
5.5 This Agreement shall enure to the benefit of and be binding upon the
Executive and his heirs, executors and administrators and upon the
Corporation and its successors and assigns.
5.6 Nothing herein derogates from any rights the Executive may have under
applicable law, and in particular the parties agree that the rights,
entitlements and benefits set out in this Agreement to be paid to the
Executive shall in no event be less than the Executive's entitlement
pursuant to the Employment Standards Act (Ontario) or any successor
legislation from time to time. Any payments made hereunder are agreed
to be inclusive of all payments required of the Corporation under the
said legislation.
5.7 This Agreement may be amended only by an instrument in writing signed
by both parties.
5.8 Neither party may waive or shall be deemed to have waived any right it
has under this Agreement (including under this section) except to the
extent that such waiver is in writing.
*********
If you are in agreement with the foregoing terms and conditions, kindly
execute below where indicated and return one fully executed copy of this
Agreement to the attention of Rosemary Laurin, Vice President Human Resources,
JetForm Corporation, 560 Rochester Street, Ottawa, Ontario K1S 5K2
Yours very truly,
JETFORM CORPORATION
Per:-----------------------------------
Authorized Officer
Accepted and agreed this ____ day
of ____________, 1998.
- ---------------------------------
Exhibit 10.31
September 22, 1998
Ian Fraser
c/o JetForm Corporation
560 Rochester Street
Ottawa, Ontario
K1S 5K2
Re: Employment Agreement
We are pleased to confirm the terms and conditions of the employment of Ian
Fraser ("you" or the "Executive") with JetForm Corporation (the "Corporation").
The Corporation believes that it is reasonable and fair to the Corporation that
you receive fair treatment in the event of the termination without cause or
adverse modification without cause of your employment. In consideration thereof,
and by your execution of this Agreement below, you wish to abide by various
non-competition and confidentiality restrictions contained herein, your
violation of which would be highly detrimental to the Corporation, and both you
and the Corporation wish formally to agree as to the terms and conditions
contained herein that will govern the termination or modification of your
employment.
Article I - Preamble and Interpretation
1.0 The parties agree that the Executive's original date of employment
with the corporation for the purposes of this agreement is January 13,
1997.
1.1 The parties agree, and represent and warrant to each other, that the
above preamble is true and accurate and is incorporated into the terms
of this Agreement.
1.2 The headings of the Articles, sections, subsections and clauses herein
are inserted for convenience of reference only and shall not affect
the meaning or construction hereof.
1.3 For the purposes of this Agreement, the following terms shall have the
following meanings, respectively:
(a) "Annual Salary" means the sum of:
(i) the annual salary of the Executive, payable to the
Executive by the Corporation at the Date of
Termination or as at the end of the month
immediately preceding the month in which
termination occurs (the "Prior Month"), whichever
is greater, and if an annual salary has not been
established, it shall be calculated by multiplying
the monthly salary of the Executive in effect for
the Prior Month by 12; and
(ii) the aggregate amount of all remuneration,
salaries, bonuses and benefits (including, without
limitation, health, dental and disability
coverage) not included in clause (i) above that
the board of directors of the Corporation acting
reasonably estimates would be payable to the
Executive during the 12 month period following the
termination of the Executive's employment by the
Corporation assuming: (1) the employment of the
Executive was not terminated during such period;
and (2) the Executive benefited from and
participated in such remuneration, salaries,
bonuses and benefits on a basis consistent with
practices in effect for senior executives of the
Corporation immediately prior to the Date of
Termination;
(b) "Date of Termination" shall mean the date of termination of
the Executive's employment, whether by the Executive or by
the Corporation or by death of the Executive;
(c) "Disability" shall mean the Executive's failure to
substantially perform his duties on a full-time basis for a
period of six months out of any 18-month period, where such
failure is a result of physical or mental illness;
(d) "Good Reason" shall include, without limitation, the
occurrence of any of the following without the Executive's
written consent (except in connection with the termination
of the employment of the Executive for Just Cause or
Disability):
(i) a material reduction by the Corporation of the
Executive's salary, benefits or any other form of
remuneration or any change in the basis upon which
the Executive's salary, benefits or any other form
of remuneration payable by the Corporation is
determined other than a reduction or change in a
manner which is consistent with industry practices
generally in effect prior to such reduction or
change.
(ii) any failure by the Corporation to continue in
effect any substantive benefit, bonus, profit
sharing, incentive, remuneration or compensation
plan, pension plan or retirement plan in which the
Executive was participating or entitled to
participate immediately prior to such failure
other than a failure to continue such benefits,
bonuses or plans on a basis consistent with
industry practices generally in effect prior to
such failure, or the Corporation taking any action
or failing to take any action, the failure of
which would adversely affect the Executive's
participation in or reduce his rights or benefits
under or pursuant to any such plan other than an
action or failure to take an action on a basis
consistent with industry practices generally in
effect prior to such action or failure, or the
Corporation failing to increase or improve such
rights or benefits on a basis consistent with
industry practices generally in effect prior to
such failure; or
(iii) any material breach by the Corporation of any
provision of this Agreement; or
(iv) the failure by the Corporation to obtain, in a
form satisfactory to the Executive acting
reasonably, an effective assumption of its
obligations hereunder by any successor to the
Corporation, including a successor to a material
portion of its business; and
(g) "Just Cause" shall mean:
(i) gross insubordination;
(ii) the continued failure or refusal by the Executive
to substantially perform his duties according to
the terms of his employment, after the Corporation
has given the Executive notice of such failure or
refusal and a reasonable opportunity to correct
it, except where such acts or omissions by the
Executive:
(A) follow an event defined herein as "Good
Reason"; or
(B) result from the Executive's Disability.
(iii) dishonesty by the Executive affecting the
Corporation;
(iv) use by the Executive of drugs or of alcohol in a
manner which materially affects his ability to
perform his employment duties;
(v) any improper act by the Executive that the
Executive knows or should reasonably know is
substantially inconsistent with his duties as an
Executive; or
(vi) any criminal act of dishonesty by the Executive
resulting or intended to result directly or
indirectly in personal gain of the Executive at
the Corporation's expense.
Article II - Duties and Compensation
2.1 The Executive shall serve the Corporation and any subsidiaries of the
Corporation in such capacity or capacities and shall perform such
duties and exercise such powers pertaining to the management and
operation of the Corporation and any subsidiaries of the Corporation
as may be determined from time to time by the board of directors of
the Corporation consistent with the office of the Executive. The
Executive shall:
(a) devote his full time and attention and his reasonable best
efforts during normal business hours to the business and
affairs of the Corporation;
(b) perform those duties that may reasonably be assigned to the
Executive diligently and faithfully to the best of the
Executive's abilities and in the best interests of the
Corporation;
(c) faithfully observe and abide by all the rules, regulations
and policies of the Corporation applicable to the Executive,
(including without limitation the Corporation's policies
respecting insider trading) from time to time in force which
are brought to the attention of the Executive or which he
should reasonably be aware; and
(d) use his reasonable best efforts to promote the interests and
goodwill of the Corporation.
2.2 Subject to Article 3 hereof, the Annual Salary payable to the
Executive shall be determined during the annual review process by the
direct line reporting executive and approved where applicable by the
Chief Operating Officer, the President, or the Compensation Committee
of the Board of Directors.
2.3 The Executive shall also be entitled to receive the vacation and
benefits set forth on a basis consistent with the company practice
generally in effect for other executives of the corporation which
benefits may be amended from time to time by the Corporation but
subject always to the provisions of Article 3 hereof.
Article III - Obligations of the Corporation upon Termination
3.1 The Corporation shall have the following obligations in the event that
the Executive's employment is terminated:
(a) Death, Disability or Retirement. If the Executive's
employment is terminated by reason of the Executive's death,
Disability or retirement, the Executive or the Executive's
family, as the case may be, shall be entitled to receive
benefits in a manner consistent with and at least equal in
amount to those made available by the Corporation to senior
executives or surviving families of the senior executives of
the Corporation under such plans, programs and policies
relating to (i) family death benefits, if any, as are in
effect at the date of the Executive's death; or (ii)
Disability or retirement, if any, as are in effect at the
Date of Termination, as the case may be.
(b) Termination by the Corporation for Just Cause and
Termination by the Executive Other Than for Good Reason. If
the Executive's employment is terminated by the Corporation
for Just Cause, or is terminated by the Executive other than
for Good Reason, the Corporation shall pay to the Executive,
if not theretofore paid, the fraction of the Annual Salary
and vacation pay, if any, earned by or payable to the
Executive by the Corporation during the then current fiscal
year of the Corporation for the period to and including the
Date of Termination, and the Corporation shall not have any
further obligations to the Executive under this Agreement or
otherwise.
(c) Termination by the Corporation Other Than for Just Cause,
Disability or Death and Termination by the Executive for
Good Reason. Either party must give 60 days written notice
of such termination. If the Executive's employment is
terminated by the Corporation other than for Just Cause,
Disability, retirement or death or is terminated by the
Executive for Good Reason:
(i) the Corporation shall pay to or to the order of
the Executive the aggregate of the following
amounts (less any deductions required by law):
(A) if not theretofore paid, the Executive's
Annual Salary for the then current
fiscal year of the Corporation for the
period to and including the Date of
Termination; and
(B) an amount equal to the annual salary;
(ii) subject to the provisions of Section 9 of the 1995
Stock Option Plan and Section 16 of the 1993 Stock
Option Plan, the Corporation shall ensure that all
options to acquire common shares of the
Corporation held by the Executive on the Date of
Termination shall continue to vest and be
exercisable for the full period during which
Executive is compensated by the Corporation as set
forth in Section 3.2. As of the last day of such
period, the executive shall have 30 days to
exercise all vested options. On the 31st day, all
unexercised options vested or unvested are
cancelled. Notwithstanding the foregoing, all
options held by the Executive, whether then vested
or not, shall immediately become exercisable (and
shall remain exercisable for the period of thirty
days following the Date of Termination in the
event that the Executive's employment is
terminated by the Corporation (other than for Just
Cause, Disability or Death) within one year
following: the acquisition by any third party of
greater than 50% of the then issued and
outstanding JetForm common shares.
(iii) the Corporation shall not seek in any way to amend
the terms of any loans from the Corporation or its
subsidiaries to the Executive;
(iv) the Corporation shall provide the Executive with
the job relocation counselling services of the
firm acceptable to the Corporation for an amount
not to exceed $15,000;
(v) if, at the Date of Termination, there were any
memberships in any clubs, social or athletic
organizations paid for by the Corporation that
were for the regular use of the executive at the
Date of Termination, the Corporation will not take
any action to terminate such memberships but need
not renew any such membership that expires; and
(vi) the Corporation shall pay to the Executive all
outstanding and accrued vacation pay to the Date
of Termination.
Upon compliance with clauses (c)(i) through (vi) above, the
Corporation shall have no further obligations to the Executive under
this Agreement or otherwise and the Executive agrees that
notwithstanding any other provision contained herein, the Executive
shall not have any right to commence any action for wrongful dismissal
or termination.
3.2 The benefits payable under this Article III shall be paid as follows:
(a) with respect to that portion of the Annual Salary relating to
salary and related benefits of the Executive, at the Corporation's
regular pay periods and (b) with respect to all other amounts, on a
basis consistent with practices in effect immediately prior to the
Date of Termination. If the Executive secures employment after the
Date of Termination and prior to receiving all amounts owing
hereunder, the Executive shall immediately inform the Corporation and
the Corporation shall have the right to terminate all health, life and
disability benefits being carried by the Corporation for the
Executive.
Article IV - Non-Competition, Confidentiality and Inventions and Patents
4.1 The Executive shall not while an Executive of the Corporation and for
a period of 12 months following the Date of Termination, for any
reason whatsoever, anywhere in North America, directly or indirectly,
either individually or in partnership, or in conjunction with any
other persons or corporations as principal, agent, shareholder,
employee, advisor, lender, guarantor or in any other capacity
whatsoever:
(a) carry on or be engaged in or be connected with or interested
in or receive royalties or other compensation from a segment
of any business which is directly or indirectly competitive
with the business of the Corporation or any of its
subsidiaries; or
(b) contact or solicit any designated customers of the
Corporation or any of its subsidiaries for the purposes of
selling to the designated customers any products or services
which are the same as or are competitive with, the products
or services sold by the Corporation or any of its
subsidiaries during the term of this Agreement. For the
purpose of this section, a designated customer means any
person or entity who was a customer of the Corporation or
any of its subsidiaries while the Executive was an Executive
of the Corporation.
Notwithstanding the foregoing, the Executive may hold up to five per
cent of the issued and outstanding securities of any publicly traded
company.
4.2 The Executive shall not while an Executive of the Corporation and for
a period of 12 months thereafter, directly or indirectly, employ or
retain as an independent contractor any employee of the Corporation or
any of its subsidiaries or induce or solicit, or intend to induce, any
such person to leave his/her employment.
4.3 The Executive acknowledges and agrees that:
(a) in the course of performing his duties and responsibilities
as an officer of the Corporation, he has had and will
continue in the future to have access to and has been and
will be entrusted with detailed confidential information and
trade secrets (printed or otherwise) concerning past,
present, future and contemplated products, services,
operations and marketing techniques and procedures of the
Corporation and its subsidiaries, including, without
limitation, information relating to past, present and
prospective clients, customers, suppliers and employees of
the Corporation and its subsidiaries (collectively "Trade
Secrets"), the disclosure of any of which to competitors of
the Corporation or to the general public, or the use of same
by the Executive or any competitor of the Corporation or any
of its subsidiaries, would be highly detrimental to the
interests of the Corporation;
(b) the Executive, while an officer and/or employee of the
Corporation, owes fiduciary duties to the Corporation,
including the duty to act in the best interests of the
Corporation; and
(c) the right to maintain the confidentiality of the Trade
Secrets, the right to preserve the goodwill of the
Corporation and the right to the benefit of any
relationships that have developed between the Executive and
the customers, clients and suppliers of the Corporation by
virtue of the Executive's employment with the Corporation
constitute proprietary rights of the Corporation, which the
Corporation is entitled to protect.
In acknowledgement of the matters described above, the Executive
hereby agrees that he will not, during the term of this Agreement or
any time thereafter following the termination of employment for any
reason, directly or indirectly disclose to any person or in any way
make use of (other than for the benefit of the Corporation), in any
manner, any of the Trade Secrets, provided that such Trade Secrets
shall be deemed not to include information that is or becomes
generally available to the public other than as a result of disclosure
by the Executive.
4.4 Any invention (whether patentable or otherwise), improvement, device,
industrial design, copyright, know-how or other intellectual or
industrial property developed, invented, created or improved by the
Executive during the term of this Agreement or prior to the date
hereof while the Executive was employed by the Corporation in respect
of the Corporation's business (collectively, the "Intellectual
Property") shall be the exclusive property of the Corporation. The
Corporation shall have the exclusive right to file patent applications
and to obtain patents, to register industrial designs and copyright in
the name of the Corporation in connection with the Intellectual
Property. The Executive shall execute, from time to time, upon request
by the Corporation, assignments of the Executive's rights in the
Intellectual Property to the Corporation, shall co-operate with the
Corporation in documenting the ownership of the Intellectual Property
by the Corporation, and shall provide all necessary assistance in the
filing and prosecution of any applications to register the
Intellectual Property. The Executive hereby waives his moral rights to
the Intellectual Property at common law and under section 14.1 of the
Copyright Act or successor provisions from time to time, which are
acknowledged to include the right to the integrity of the Intellectual
Property and the right, where reasonable in the circumstances, to be
associated with the Intellectual Property or an author by name or
under a pseudonym and the right to remain anonymous when any
translation of the Intellectual Property is produced, performed or
published.
4.5 The Executive acknowledges that a breach or threatened breach by the
Executive of the provisions of any of this Article 4 will result in
the Corporation and its shareholders suffering irrevocable harm which
is not capable of being calculated and which cannot be fully or
adequately compensated by the recovery of damages alone. Accordingly,
the Executive agrees that the Corporation shall be entitled to interim
and permanent injunctive relief, specific performance and other
equitable remedies, in addition to any other relief to which the
Corporation may be entitled.
Article V- General
5.1 The Executive acknowledges that he has had an opportunity to obtain
independent legal advice before signing this Agreement and agrees that
either such advice has been obtained or that he does not wish to seek
or obtain such independent legal advice. The Executive acknowledges
that he has read this Agreement and fully understands the nature and
effect of it and the terms contained herein and that the said terms
are fair and reasonable and correctly set out the Executive's position
in the event of termination.
5.2 The Executive agrees that after termination of his employment for
whatever reason, he will tender his resignation from any position he
may hold as an officer of the Corporation or as an officer or director
of any of its affiliated or associated companies, provided that doing
so will not reduce the obligations of the Corporation described
herein.
5.3 If any provision of this Agreement is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or
impair the validity of any other provision herein and each such
provision is deemed to be separate, distinct and severable.
5.4 Any notice required or permitted to be given under this Agreement
shall be in writing and shall be properly given if delivered by hand
or mailed by prepaid registered mail addressed as follows:
(a) in the case of the Corporation, to:
JetForm Corporation
560 Rochester Street
Ottawa, Ontario
K1S 5K2
Attention: Chief Executive Officer
(b) in the case of the Executive, to:
Ian Fraser
c/o JetForm Corporation
or to such other address as the parties may from time to time specify
by notice given in accordance herewith. Any notice so given shall be
conclusively deemed to have been given or made on the day of delivery,
if delivered, or if mailed by registered mail, upon the date shown on
the postal return receipt as the date upon which the envelope
containing such notice was actually received by the addressee provided
in the event of mail disruption, delivery may only be made by hand.
5.5 This Agreement shall enure to the benefit of and be binding upon the
Executive and his heirs, executors and administrators and upon the
Corporation and its successors and assigns.
5.6 Nothing herein derogates from any rights the Executive may have under
applicable law, and in particular the parties agree that the rights,
entitlements and benefits set out in this Agreement to be paid to the
Executive shall in no event be less than the Executive's entitlement
pursuant to the Employment Standards Act (Ontario) or any successor
legislation from time to time. Any payments made hereunder are agreed
to be inclusive of all payments required of the Corporation under the
said legislation.
5.7 This Agreement may be amended only by an instrument in writing signed
by both parties.
5.8 Neither party may waive or shall be deemed to have waived any right it
has under this Agreement (including under this section) except to the
extent that such waiver is in writing.
*********
If you are in agreement with the foregoing terms and conditions, kindly
execute below where indicated and return one fully executed copy of this
Agreement to the attention of Rosemary Laurin, Vice President Human Resources,
JetForm Corporation, 560 Rochester Street, Ottawa, Ontario K1S 5K2
Yours very truly,
JETFORM CORPORATION
Per:
------------------------------------
Authorized Officer
Accepted and agreed this ____ day
of ____________, 1998.
- ---------------------------------
Exhibit 10.32
September 22, 1998
Jim Bursey
c/o JetForm Corporation
560 Rochester Street
Ottawa, Ontario
K1S 5K2
Re: Employment Agreement
We are pleased to confirm the terms and conditions of the employment of Jim
Bursey ("you" or the "Executive") with JetForm Corporation (the "Corporation").
The Corporation believes that it is reasonable and fair to the Corporation that
you receive fair treatment in the event of the termination without cause or
adverse modification without cause of your employment. In consideration thereof,
and by your execution of this Agreement below, you wish to abide by various
non-competition and confidentiality restrictions contained herein, your
violation of which would be highly detrimental to the Corporation, and both you
and the Corporation wish formally to agree as to the terms and conditions
contained herein that will govern the termination or modification of your
employment.
Article I - Preamble and Interpretation
1.0 The parties agree that the Executive's original date of employment
with the corporation for the purposes of this agreement is May 08,
1995.
1.1 The parties agree, and represent and warrant to each other, that the
above preamble is true and accurate and is incorporated into the terms
of this Agreement.
1.2 The headings of the Articles, sections, subsections and clauses herein
are inserted for convenience of reference only and shall not affect
the meaning or construction hereof.
1.3 For the purposes of this Agreement, the following terms shall have the
following meanings, respectively:
(a) "Annual Salary" means the sum of:
(i) the annual salary of the Executive, payable to the
Executive by the Corporation at the Date of
Termination or as at the end of the month
immediately preceding the month in which
termination occurs (the "Prior Month"), whichever
is greater, and if an annual salary has not been
established, it shall be calculated by multiplying
the monthly salary of the Executive in effect for
the Prior Month by 12; and
(ii) the aggregate amount of all remuneration,
salaries, bonuses and benefits (including, without
limitation, health, dental and disability
coverage) not included in clause (i) above that
the board of directors of the Corporation acting
reasonably estimates would be payable to the
Executive during the 12 month period following the
termination of the Executive's employment by the
Corporation assuming: (1) the employment of the
Executive was not terminated during such period;
and (2) the Executive benefited from and
participated in such remuneration, salaries,
bonuses and benefits on a basis consistent with
practices in effect for senior executives of the
Corporation immediately prior to the Date of
Termination;
(b) "Date of Termination" shall mean the date of termination of
the Executive's employment, whether by the Executive or by
the Corporation or by death of the Executive;
(c) "Disability" shall mean the Executive's failure to
substantially perform his duties on a full-time basis for a
period of six months out of any 18-month period, where such
failure is a result of physical or mental illness;
(d) "Good Reason" shall include, without limitation, the
occurrence of any of the following without the Executive's
written consent (except in connection with the termination
of the employment of the Executive for Just Cause or
Disability):
(i) a material reduction by the Corporation of the
Executive's salary, benefits or any other form of
remuneration or any change in the basis upon which
the Executive's salary, benefits or any other form
of remuneration payable by the Corporation is
determined other than a reduction or change in a
manner which is consistent with industry practices
generally in effect prior to such reduction or
change.
(ii) any failure by the Corporation to continue in
effect any substantive benefit, bonus, profit
sharing, incentive, remuneration or compensation
plan, pension plan or retirement plan in which the
Executive was participating or entitled to
participate immediately prior to such failure
other than a failure to continue such benefits,
bonuses or plans on a basis consistent with
industry practices generally in effect prior to
such failure, or the Corporation taking any action
or failing to take any action, the failure of
which would adversely affect the Executive's
participation in or reduce his rights or benefits
under or pursuant to any such plan other than an
action or failure to take an action on a basis
consistent with industry practices generally in
effect prior to such action or failure, or the
Corporation failing to increase or improve such
rights or benefits on a basis consistent with
industry practices generally in effect prior to
such failure; or
(iii) any material breach by the Corporation of any
provision of this Agreement; or
(iv) the failure by the Corporation to obtain, in a
form satisfactory to the Executive acting
reasonably, an effective assumption of its
obligations hereunder by any successor to the
Corporation, including a successor to a material
portion of its business; and
(g) "Just Cause" shall mean:
(i) gross insubordination;
(ii) the continued failure or refusal by the Executive
to substantially perform his duties according to
the terms of his employment, after the Corporation
has given the Executive notice of such failure or
refusal and a reasonable opportunity to correct
it, except where such acts or omissions by the
Executive:
(A) follow an event defined herein as "Good
Reason"; or
(B) result from the Executive's Disability.
(iii) dishonesty by the Executive affecting the
Corporation;
(iv) use by the Executive of drugs or of alcohol in a
manner which materially affects his ability to
perform his employment duties;
(v) any improper act by the Executive that the
Executive knows or should reasonably know is
substantially inconsistent with his duties as an
Executive; or
(vi) any criminal act of dishonesty by the Executive
resulting or intended to result directly or
indirectly in personal gain of the Executive at
the Corporation's expense.
Article II - Duties and Compensation
2.1 The Executive shall serve the Corporation and any subsidiaries of the
Corporation in such capacity or capacities and shall perform such
duties and exercise such powers pertaining to the management and
operation of the Corporation and any subsidiaries of the Corporation
as may be determined from time to time by the board of directors of
the Corporation consistent with the office of the Executive. The
Executive shall:
(a) devote his full time and attention and his reasonable best
efforts during normal business hours to the business and
affairs of the Corporation;
(b) perform those duties that may reasonably be assigned to the
Executive diligently and faithfully to the best of the
Executive's abilities and in the best interests of the
Corporation;
(c) faithfully observe and abide by all the rules, regulations
and policies of the Corporation applicable to the Executive,
(including without limitation the Corporation's policies
respecting insider trading) from time to time in force which
are brought to the attention of the Executive or which he
should reasonably be aware; and
(d) use his reasonable best efforts to promote the interests and
goodwill of the Corporation.
2.2 Subject to Article 3 hereof, the Annual Salary payable to the
Executive shall be determined during the annual review process by the
direct line reporting executive and approved where applicable by the
Chief Operating Officer, the President, or the Compensation Committee
of the Board of Directors.
2.3 The Executive shall also be entitled to receive the vacation and
benefits set forth on a basis consistent with the company practice
generally in effect for other executives of the corporation which
benefits may be amended from time to time by the Corporation but
subject always to the provisions of Article 3 hereof.
Article III - Obligations of the Corporation upon Termination
3.1 The Corporation shall have the following obligations in the event that
the Executive's employment is terminated:
(a) Death, Disability or Retirement. If the Executive's
employment is terminated by reason of the Executive's death,
Disability or retirement, the Executive or the Executive's
family, as the case may be, shall be entitled to receive
benefits in a manner consistent with and at least equal in
amount to those made available by the Corporation to senior
executives or surviving families of the senior executives of
the Corporation under such plans, programs and policies
relating to (i) family death benefits, if any, as are in
effect at the date of the Executive's death; or (ii)
Disability or retirement, if any, as are in effect at the
Date of Termination, as the case may be.
(b) Termination by the Corporation for Just Cause and
Termination by the Executive Other Than for Good Reason. If
the Executive's employment is terminated by the Corporation
for Just Cause, or is terminated by the Executive other than
for Good Reason, the Corporation shall pay to the Executive,
if not theretofore paid, the fraction of the Annual Salary
and vacation pay, if any, earned by or payable to the
Executive by the Corporation during the then current fiscal
year of the Corporation for the period to and including the
Date of Termination, and the Corporation shall not have any
further obligations to the Executive under this Agreement or
otherwise.
(c) Termination by the Corporation Other Than for Just Cause,
Disability or Death and Termination by the Executive for
Good Reason. Either party must give 60 days written notice
of such termination. If the Executive's employment is
terminated by the Corporation other than for Just Cause,
Disability, retirement or death or is terminated by the
Executive for Good Reason:
(i) the Corporation shall pay to or to the order of
the Executive the aggregate of the following
amounts (less any deductions required by law):
(A) if not theretofore paid, the Executive's
Annual Salary for the then current
fiscal year of the Corporation for the
period to and including the Date of
Termination; and
(B) an amount equal to the annual salary;
(ii) subject to the provisions of Section 9 of the 1995
Stock Option Plan and Section 16 of the 1993 Stock
Option Plan, the Corporation shall ensure that all
options to acquire common shares of the
Corporation held by the Executive on the Date of
Termination shall continue to vest and be
exercisable for the full period during which
Executive is compensated by the Corporation as set
forth in Section 3.2. As of the last day of such
period, the executive shall have 30 days to
exercise all vested options. On the 31st day, all
unexercised options vested or unvested are
cancelled. Notwithstanding the foregoing, all
options held by the Executive, whether then vested
or not, shall immediately become exercisable (and
shall remain exercisable for the period of thirty
days following the Date of Termination in the
event that the Executive's employment is
terminated by the Corporation (other than for Just
Cause, Disability or Death) within one year
following: the acquisition by any third party of
greater than 50% of the then issued and
outstanding JetForm common shares.
(iii) the Corporation shall not seek in any way to amend
the terms of any loans from the Corporation or its
subsidiaries to the Executive;
(iv) the Corporation shall provide the Executive with
the job relocation counselling services of the
firm acceptable to the Corporation for an amount
not to exceed $15,000;
(v) if, at the Date of Termination, there were any
memberships in any clubs, social or athletic
organizations paid for by the Corporation that
were for the regular use of the executive at the
Date of Termination, the Corporation will not take
any action to terminate such memberships but need
not renew any such membership that expires; and
(vi) the Corporation shall pay to the Executive all
outstanding and accrued vacation pay to the Date
of Termination.
Upon compliance with clauses (c)(i) through (vi) above, the
Corporation shall have no further obligations to the Executive under
this Agreement or otherwise and the Executive agrees that
notwithstanding any other provision contained herein, the Executive
shall not have any right to commence any action for wrongful dismissal
or termination.
3.2 The benefits payable under this Article III shall be paid as follows:
(a) with respect to that portion of the Annual Salary relating to
salary and related benefits of the Executive, at the Corporation's
regular pay periods and (b) with respect to all other amounts, on a
basis consistent with practices in effect immediately prior to the
Date of Termination. If the Executive secures employment after the
Date of Termination and prior to receiving all amounts owing
hereunder, the Executive shall immediately inform the Corporation and
the Corporation shall have the right to terminate all health, life and
disability benefits being carried by the Corporation for the
Executive.
Article IV - Non-Competition, Confidentiality and Inventions and Patents
4.1 The Executive shall not while an Executive of the Corporation and for
a period of 12 months following the Date of Termination, for any
reason whatsoever, anywhere in North America, directly or indirectly,
either individually or in partnership, or in conjunction with any
other persons or corporations as principal, agent, shareholder,
employee, advisor, lender, guarantor or in any other capacity
whatsoever:
(a) carry on or be engaged in or be connected with or interested
in or receive royalties or other compensation from a segment
of any business which is directly or indirectly competitive
with the business of the Corporation or any of its
subsidiaries; or
(b) contact or solicit any designated customers of the
Corporation or any of its subsidiaries for the purposes of
selling to the designated customers any products or services
which are the same as or are competitive with, the products
or services sold by the Corporation or any of its
subsidiaries during the term of this Agreement. For the
purpose of this section, a designated customer means any
person or entity who was a customer of the Corporation or
any of its subsidiaries while the Executive was an Executive
of the Corporation.
Notwithstanding the foregoing, the Executive may hold up to five per
cent of the issued and outstanding securities of any publicly traded
company.
4.2 The Executive shall not while an Executive of the Corporation and for
a period of 12 months thereafter, directly or indirectly, employ or
retain as an independent contractor any employee of the Corporation or
any of its subsidiaries or induce or solicit, or intend to induce, any
such person to leave his/her employment.
4.3 The Executive acknowledges and agrees that:
(a) in the course of performing his duties and responsibilities
as an officer of the Corporation, he has had and will
continue in the future to have access to and has been and
will be entrusted with detailed confidential information and
trade secrets (printed or otherwise) concerning past,
present, future and contemplated products, services,
operations and marketing techniques and procedures of the
Corporation and its subsidiaries, including, without
limitation, information relating to past, present and
prospective clients, customers, suppliers and employees of
the Corporation and its subsidiaries (collectively "Trade
Secrets"), the disclosure of any of which to competitors of
the Corporation or to the general public, or the use of same
by the Executive or any competitor of the Corporation or any
of its subsidiaries, would be highly detrimental to the
interests of the Corporation;
(b) the Executive, while an officer and/or employee of the
Corporation, owes fiduciary duties to the Corporation,
including the duty to act in the best interests of the
Corporation; and
(c) the right to maintain the confidentiality of the Trade
Secrets, the right to preserve the goodwill of the
Corporation and the right to the benefit of any
relationships that have developed between the Executive and
the customers, clients and suppliers of the Corporation by
virtue of the Executive's employment with the Corporation
constitute proprietary rights of the Corporation, which the
Corporation is entitled to protect.
In acknowledgement of the matters described above, the Executive
hereby agrees that he will not, during the term of this Agreement or
any time thereafter following the termination of employment for any
reason, directly or indirectly disclose to any person or in any way
make use of (other than for the benefit of the Corporation), in any
manner, any of the Trade Secrets, provided that such Trade Secrets
shall be deemed not to include information that is or becomes
generally available to the public other than as a result of disclosure
by the Executive.
4.4 Any invention (whether patentable or otherwise), improvement, device,
industrial design, copyright, know-how or other intellectual or
industrial property developed, invented, created or improved by the
Executive during the term of this Agreement or prior to the date
hereof while the Executive was employed by the Corporation in respect
of the Corporation's business (collectively, the "Intellectual
Property") shall be the exclusive property of the Corporation. The
Corporation shall have the exclusive right to file patent applications
and to obtain patents, to register industrial designs and copyright in
the name of the Corporation in connection with the Intellectual
Property. The Executive shall execute, from time to time, upon request
by the Corporation, assignments of the Executive's rights in the
Intellectual Property to the Corporation, shall co-operate with the
Corporation in documenting the ownership of the Intellectual Property
by the Corporation, and shall provide all necessary assistance in the
filing and prosecution of any applications to register the
Intellectual Property. The Executive hereby waives his moral rights to
the Intellectual Property at common law and under section 14.1 of the
Copyright Act or successor provisions from time to time, which are
acknowledged to include the right to the integrity of the Intellectual
Property and the right, where reasonable in the circumstances, to be
associated with the Intellectual Property or an author by name or
under a pseudonym and the right to remain anonymous when any
translation of the Intellectual Property is produced, performed or
published.
4.5 The Executive acknowledges that a breach or threatened breach by the
Executive of the provisions of any of this Article 4 will result in
the Corporation and its shareholders suffering irrevocable harm which
is not capable of being calculated and which cannot be fully or
adequately compensated by the recovery of damages alone. Accordingly,
the Executive agrees that the Corporation shall be entitled to interim
and permanent injunctive relief, specific performance and other
equitable remedies, in addition to any other relief to which the
Corporation may be entitled.
Article V- General
5.1 The Executive acknowledges that he has had an opportunity to obtain
independent legal advice before signing this Agreement and agrees that
either such advice has been obtained or that he does not wish to seek
or obtain such independent legal advice. The Executive acknowledges
that he has read this Agreement and fully understands the nature and
effect of it and the terms contained herein and that the said terms
are fair and reasonable and correctly set out the Executive's position
in the event of termination.
5.2 The Executive agrees that after termination of his employment for
whatever reason, he will tender his resignation from any position he
may hold as an officer of the Corporation or as an officer or director
of any of its affiliated or associated companies, provided that doing
so will not reduce the obligations of the Corporation described
herein.
5.3 If any provision of this Agreement is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or
impair the validity of any other provision herein and each such
provision is deemed to be separate, distinct and severable.
5.4 Any notice required or permitted to be given under this Agreement
shall be in writing and shall be properly given if delivered by hand
or mailed by prepaid registered mail addressed as follows:
(a) in the case of the Corporation, to:
JetForm Corporation
560 Rochester Street
Ottawa, Ontario
K1S 5K2
Attention: Chief Executive Officer
(b) in the case of the Executive, to:
Jim Bursey
c/o JetForm Corporation
or to such other address as the parties may from time to time specify
by notice given in accordance herewith. Any notice so given shall be
conclusively deemed to have been given or made on the day of delivery,
if delivered, or if mailed by registered mail, upon the date shown on
the postal return receipt as the date upon which the envelope
containing such notice was actually received by the addressee provided
in the event of mail disruption, delivery may only be made by hand.
5.5 This Agreement shall enure to the benefit of and be binding upon the
Executive and his heirs, executors and administrators and upon the
Corporation and its successors and assigns.
5.6 Nothing herein derogates from any rights the Executive may have under
applicable law, and in particular the parties agree that the rights,
entitlements and benefits set out in this Agreement to be paid to the
Executive shall in no event be less than the Executive's entitlement
pursuant to the Employment Standards Act (Ontario) or any successor
legislation from time to time. Any payments made hereunder are agreed
to be inclusive of all payments required of the Corporation under the
said legislation.
5.7 This Agreement may be amended only by an instrument in writing signed
by both parties.
5.8 Neither party may waive or shall be deemed to have waived any right it
has under this Agreement (including under this section) except to the
extent that such waiver is in writing.
*********
If you are in agreement with the foregoing terms and conditions, kindly
execute below where indicated and return one fully executed copy of this
Agreement to the attention of Rosemary Laurin, Vice President Human Resources,
JetForm Corporation, 560 Rochester Street, Ottawa, Ontario K1S 5K2
Yours very truly,
JETFORM CORPORATION
Per:
------------------------------------
Authorized Officer
Accepted and agreed this ____ day
of ____________, 1998.
- ---------------------------------
Exhibit 10.33
September 22, 1998
Hugh Millikin
c/o JetForm Corporation
560 Rochester Street
Ottawa, Ontario
K1S 5K2
Re: Employment Agreement
We are pleased to confirm the terms and conditions of the employment of
Hugh Millikin ("you" or the "Executive") with JetForm Corporation (the
"Corporation"). The Corporation believes that it is reasonable and fair to the
Corporation that you receive fair treatment in the event of the termination
without cause or adverse modification without cause of your employment. In
consideration thereof, and by your execution of this Agreement below, you wish
to abide by various non-competition and confidentiality restrictions contained
herein, your violation of which would be highly detrimental to the Corporation,
and both you and the Corporation wish formally to agree as to the terms and
conditions contained herein that will govern the termination or modification of
your employment.
Article I - Preamble and Interpretation
1.0 The parties agree that the Executive's original date of employment
with the corporation for the purposes of this agreement is January 01,
1994.
1.1 The parties agree, and represent and warrant to each other, that the
above preamble is true and accurate and is incorporated into the terms
of this Agreement.
1.2 The headings of the Articles, sections, subsections and clauses herein
are inserted for convenience of reference only and shall not affect
the meaning or construction hereof.
1.3 For the purposes of this Agreement, the following terms shall have the
following meanings, respectively:
(a) "Annual Salary" means the sum of:
(i) the annual salary of the Executive, payable to the
Executive by the Corporation at the Date of
Termination or as at the end of the month
immediately preceding the month in which
termination occurs (the "Prior Month"), whichever
is greater, and if an annual salary has not been
established, it shall be calculated by multiplying
the monthly salary of the Executive in effect for
the Prior Month by 12; and
(ii) the aggregate amount of all remuneration,
salaries, bonuses and benefits (including, without
limitation, health, dental and disability
coverage) not included in clause (i) above that
the board of directors of the Corporation acting
reasonably estimates would be payable to the
Executive during the 12 month period following the
termination of the Executive's employment by the
Corporation assuming: (1) the employment of the
Executive was not terminated during such period;
and (2) the Executive benefited from and
participated in such remuneration, salaries,
bonuses and benefits on a basis consistent with
practices in effect for senior executives of the
Corporation immediately prior to the Date of
Termination;
(b) "Date of Termination" shall mean the date of termination of
the Executive's employment, whether by the Executive or by
the Corporation or by death of the Executive;
(c) "Disability" shall mean the Executive's failure to
substantially perform his duties on a full-time basis for a
period of six months out of any 18-month period, where such
failure is a result of physical or mental illness;
(d) "Good Reason" shall include, without limitation, the
occurrence of any of the following without the Executive's
written consent (except in connection with the termination
of the employment of the Executive for Just Cause or
Disability):
(i) a material reduction by the Corporation of the
Executive's salary, benefits or any other form of
remuneration or any change in the basis upon which
the Executive's salary, benefits or any other form
of remuneration payable by the Corporation is
determined other than a reduction or change in a
manner which is consistent with industry practices
generally in effect prior to such reduction or
change.
(ii) any failure by the Corporation to continue in
effect any substantive benefit, bonus, profit
sharing, incentive, remuneration or compensation
plan, pension plan or retirement plan in which the
Executive was participating or entitled to
participate immediately prior to such failure
other than a failure to continue such benefits,
bonuses or plans on a basis consistent with
industry practices generally in effect prior to
such failure, or the Corporation taking any action
or failing to take any action, the failure of
which would adversely affect the Executive's
participation in or reduce his rights or benefits
under or pursuant to any such plan other than an
action or failure to take an action on a basis
consistent with industry practices generally in
effect prior to such action or failure, or the
Corporation failing to increase or improve such
rights or benefits on a basis consistent with
industry practices generally in effect prior to
such failure; or
(iii) any material breach by the Corporation of any
provision of this Agreement; or
(iv) the failure by the Corporation to obtain, in a
form satisfactory to the Executive acting
reasonably, an effective assumption of its
obligations hereunder by any successor to the
Corporation, including a successor to a material
portion of its business; and
(g) "Just Cause" shall mean:
(i) gross insubordination;
(ii) the continued failure or refusal by the Executive
to substantially perform his duties according to
the terms of his employment, after the Corporation
has given the Executive notice of such failure or
refusal and a reasonable opportunity to correct
it, except where such acts or omissions by the
Executive:
(A) follow an event defined herein as "Good
Reason"; or
(B) result from the Executive's Disability.
(iii) dishonesty by the Executive affecting the
Corporation;
(iv) use by the Executive of drugs or of alcohol in a
manner which materially affects his ability to
perform his employment duties;
(v) any improper act by the Executive that the
Executive knows or should reasonably know is
substantially inconsistent with his duties as an
Executive; or
(vi) any criminal act of dishonesty by the Executive
resulting or intended to result directly or
indirectly in personal gain of the Executive at
the Corporation's expense.
Article II - Duties and Compensation
2.1 The Executive shall serve the Corporation and any subsidiaries of the
Corporation in such capacity or capacities and shall perform such
duties and exercise such powers pertaining to the management and
operation of the Corporation and any subsidiaries of the Corporation
as may be determined from time to time by the board of directors of
the Corporation consistent with the office of the Executive. The
Executive shall:
(a) devote his full time and attention and his reasonable best
efforts during normal business hours to the business and
affairs of the Corporation;
(b) perform those duties that may reasonably be assigned to the
Executive diligently and faithfully to the best of the
Executive's abilities and in the best interests of the
Corporation;
(c) faithfully observe and abide by all the rules, regulations
and policies of the Corporation applicable to the Executive,
(including without limitation the Corporation's policies
respecting insider trading) from time to time in force which
are brought to the attention of the Executive or which he
should reasonably be aware; and
(d) use his reasonable best efforts to promote the interests and
goodwill of the Corporation.
2.2 Subject to Article 3 hereof, the Annual Salary payable to the
Executive shall be determined during the annual review process by the
direct line reporting executive and approved where applicable by the
Chief Operating Officer, the President, or the Compensation Committee
of the Board of Directors.
2.3 The Executive shall also be entitled to receive the vacation and
benefits set forth on a basis consistent with the company practice
generally in effect for other executives of the corporation which
benefits may be amended from time to time by the Corporation but
subject always to the provisions of Article 3 hereof.
Article III - Obligations of the Corporation upon Termination
3.1 The Corporation shall have the following obligations in the event that
the Executive's employment is terminated:
(a) Death, Disability or Retirement. If the Executive's
employment is terminated by reason of the Executive's death,
Disability or retirement, the Executive or the Executive's
family, as the case may be, shall be entitled to receive
benefits in a manner consistent with and at least equal in
amount to those made available by the Corporation to senior
executives or surviving families of the senior executives of
the Corporation under such plans, programs and policies
relating to (i) family death benefits, if any, as are in
effect at the date of the Executive's death; or (ii)
Disability or retirement, if any, as are in effect at the
Date of Termination, as the case may be.
(b) Termination by the Corporation for Just Cause and
Termination by the Executive Other Than for Good Reason. If
the Executive's employment is terminated by the Corporation
for Just Cause, or is terminated by the Executive other than
for Good Reason, the Corporation shall pay to the Executive,
if not theretofore paid, the fraction of the Annual Salary
and vacation pay, if any, earned by or payable to the
Executive by the Corporation during the then current fiscal
year of the Corporation for the period to and including the
Date of Termination, and the Corporation shall not have any
further obligations to the Executive under this Agreement or
otherwise.
(c) Termination by the Corporation Other Than for Just Cause,
Disability or Death and Termination by the Executive for
Good Reason. Either party must give 60 days written notice
of such termination. If the Executive's employment is
terminated by the Corporation other than for Just Cause,
Disability, retirement or death or is terminated by the
Executive for Good Reason:
(i) the Corporation shall pay to or to the order of
the Executive the aggregate of the following
amounts (less any deductions required by law):
(A) if not theretofore paid, the Executive's
Annual Salary for the then current
fiscal year of the Corporation for the
period to and including the Date of
Termination; and
(B) an amount equal to the annual salary;
(ii) subject to the provisions of Section 9 of the 1995
Stock Option Plan and Section 16 of the 1993 Stock
Option Plan, the Corporation shall ensure that all
options to acquire common shares of the
Corporation held by the Executive on the Date of
Termination shall continue to vest and be
exercisable for the full period during which
Executive is compensated by the Corporation as set
forth in Section 3.2. As of the last day of such
period, the executive shall have 30 days to
exercise all vested options. On the 31st day, all
unexercised options vested or unvested are
cancelled. Notwithstanding the foregoing, all
options held by the Executive, whether then vested
or not, shall immediately become exercisable (and
shall remain exercisable for the period of thirty
days following the Date of Termination in the
event that the Executive's employment is
terminated by the Corporation (other than for Just
Cause, Disability or Death) within one year
following: the acquisition by any third party of
greater than 50% of the then issued and
outstanding JetForm common shares.
(iii) the Corporation shall not seek in any way to amend
the terms of any loans from the Corporation or its
subsidiaries to the Executive;
(iv) the Corporation shall provide the Executive with
the job relocation counselling services of the
firm acceptable to the Corporation for an amount
not to exceed $15,000;
(v) if, at the Date of Termination, there were any
memberships in any clubs, social or athletic
organizations paid for by the Corporation that
were for the regular use of the executive at the
Date of Termination, the Corporation will not take
any action to terminate such memberships but need
not renew any such membership that expires; and
(vi) the Corporation shall pay to the Executive all
outstanding and accrued vacation pay to the Date
of Termination.
Upon compliance with clauses (c)(i) through (vi) above, the
Corporation shall have no further obligations to the Executive under
this Agreement or otherwise and the Executive agrees that
notwithstanding any other provision contained herein, the Executive
shall not have any right to commence any action for wrongful dismissal
or termination.
3.2 The benefits payable under this Article III shall be paid as follows:
(a) with respect to that portion of the Annual Salary relating to
salary and related benefits of the Executive, at the Corporation's
regular pay periods and (b) with respect to all other amounts, on a
basis consistent with practices in effect immediately prior to the
Date of Termination. If the Executive secures employment after the
Date of Termination and prior to receiving all amounts owing
hereunder, the Executive shall immediately inform the Corporation and
the Corporation shall have the right to terminate all health, life and
disability benefits being carried by the Corporation for the
Executive.
Article IV - Non-Competition, Confidentiality and Inventions and Patents
4.1 The Executive shall not while an Executive of the Corporation and for
a period of 12 months following the Date of Termination, for any
reason whatsoever, anywhere in North America, directly or indirectly,
either individually or in partnership, or in conjunction with any
other persons or corporations as principal, agent, shareholder,
employee, advisor, lender, guarantor or in any other capacity
whatsoever:
(a) carry on or be engaged in or be connected with or interested
in or receive royalties or other compensation from a segment
of any business which is directly or indirectly competitive
with the business of the Corporation or any of its
subsidiaries; or
(b) contact or solicit any designated customers of the
Corporation or any of its subsidiaries for the purposes of
selling to the designated customers any products or services
which are the same as or are competitive with, the products
or services sold by the Corporation or any of its
subsidiaries during the term of this Agreement. For the
purpose of this section, a designated customer means any
person or entity who was a customer of the Corporation or
any of its subsidiaries while the Executive was an Executive
of the Corporation.
Notwithstanding the foregoing, the Executive may hold up to five per
cent of the issued and outstanding securities of any publicly traded
company.
4.2 The Executive shall not while an Executive of the Corporation and for
a period of 12 months thereafter, directly or indirectly, employ or
retain as an independent contractor any employee of the Corporation or
any of its subsidiaries or induce or solicit, or intend to induce, any
such person to leave his/her employment.
4.3 The Executive acknowledges and agrees that:
(a) in the course of performing his duties and responsibilities
as an officer of the Corporation, he has had and will
continue in the future to have access to and has been and
will be entrusted with detailed confidential information and
trade secrets (printed or otherwise) concerning past,
present, future and contemplated products, services,
operations and marketing techniques and procedures of the
Corporation and its subsidiaries, including, without
limitation, information relating to past, present and
prospective clients, customers, suppliers and employees of
the Corporation and its subsidiaries (collectively "Trade
Secrets"), the disclosure of any of which to competitors of
the Corporation or to the general public, or the use of same
by the Executive or any competitor of the Corporation or any
of its subsidiaries, would be highly detrimental to the
interests of the Corporation;
(b) the Executive, while an officer and/or employee of the
Corporation, owes fiduciary duties to the Corporation,
including the duty to act in the best interests of the
Corporation; and
(c) the right to maintain the confidentiality of the Trade
Secrets, the right to preserve the goodwill of the
Corporation and the right to the benefit of any
relationships that have developed between the Executive and
the customers, clients and suppliers of the Corporation by
virtue of the Executive's employment with the Corporation
constitute proprietary rights of the Corporation, which the
Corporation is entitled to protect.
In acknowledgement of the matters described above, the Executive
hereby agrees that he will not, during the term of this Agreement or
any time thereafter following the termination of employment for any
reason, directly or indirectly disclose to any person or in any way
make use of (other than for the benefit of the Corporation), in any
manner, any of the Trade Secrets, provided that such Trade Secrets
shall be deemed not to include information that is or becomes
generally available to the public other than as a result of disclosure
by the Executive.
4.4 Any invention (whether patentable or otherwise), improvement, device,
industrial design, copyright, know-how or other intellectual or
industrial property developed, invented, created or improved by the
Executive during the term of this Agreement or prior to the date
hereof while the Executive was employed by the Corporation in respect
of the Corporation's business (collectively, the "Intellectual
Property") shall be the exclusive property of the Corporation. The
Corporation shall have the exclusive right to file patent applications
and to obtain patents, to register industrial designs and copyright in
the name of the Corporation in connection with the Intellectual
Property. The Executive shall execute, from time to time, upon request
by the Corporation, assignments of the Executive's rights in the
Intellectual Property to the Corporation, shall co-operate with the
Corporation in documenting the ownership of the Intellectual Property
by the Corporation, and shall provide all necessary assistance in the
filing and prosecution of any applications to register the
Intellectual Property. The Executive hereby waives his moral rights to
the Intellectual Property at common law and under section 14.1 of the
Copyright Act or successor provisions from time to time, which are
acknowledged to include the right to the integrity of the Intellectual
Property and the right, where reasonable in the circumstances, to be
associated with the Intellectual Property or an author by name or
under a pseudonym and the right to remain anonymous when any
translation of the Intellectual Property is produced, performed or
published.
4.5 The Executive acknowledges that a breach or threatened breach by the
Executive of the provisions of any of this Article 4 will result in
the Corporation and its shareholders suffering irrevocable harm which
is not capable of being calculated and which cannot be fully or
adequately compensated by the recovery of damages alone. Accordingly,
the Executive agrees that the Corporation shall be entitled to interim
and permanent injunctive relief, specific performance and other
equitable remedies, in addition to any other relief to which the
Corporation may be entitled.
Article V- General
5.1 The Executive acknowledges that he has had an opportunity to obtain
independent legal advice before signing this Agreement and agrees that
either such advice has been obtained or that he does not wish to seek
or obtain such independent legal advice. The Executive acknowledges
that he has read this Agreement and fully understands the nature and
effect of it and the terms contained herein and that the said terms
are fair and reasonable and correctly set out the Executive's position
in the event of termination.
5.2 The Executive agrees that after termination of his employment for
whatever reason, he will tender his resignation from any position he
may hold as an officer of the Corporation or as an officer or director
of any of its affiliated or associated companies, provided that doing
so will not reduce the obligations of the Corporation described
herein.
5.3 If any provision of this Agreement is determined to be void or
unenforceable in whole or in part, it shall not be deemed to affect or
impair the validity of any other provision herein and each such
provision is deemed to be separate, distinct and severable.
5.4 Any notice required or permitted to be given under this Agreement
shall be in writing and shall be properly given if delivered by hand
or mailed by prepaid registered mail addressed as follows:
(a) in the case of the Corporation, to:
JetForm Corporation
560 Rochester Street
Ottawa, Ontario
K1S 5K2
Attention: Chief Executive Officer
(b) in the case of the Executive, to:
Hugh Millikin
c/o JetForm Corporation
or to such other address as the parties may from time to time specify
by notice given in accordance herewith. Any notice so given shall be
conclusively deemed to have been given or made on the day of delivery,
if delivered, or if mailed by registered mail, upon the date shown on
the postal return receipt as the date upon which the envelope
containing such notice was actually received by the addressee provided
in the event of mail disruption, delivery may only be made by hand.
5.5 This Agreement shall enure to the benefit of and be binding upon the
Executive and his heirs, executors and administrators and upon the
Corporation and its successors and assigns.
5.6 Nothing herein derogates from any rights the Executive may have under
applicable law, and in particular the parties agree that the rights,
entitlements and benefits set out in this Agreement to be paid to the
Executive shall in no event be less than the Executive's entitlement
pursuant to the Employment Standards Act (Ontario) or any successor
legislation from time to time. Any payments made hereunder are agreed
to be inclusive of all payments required of the Corporation under the
said legislation.
5.7 This Agreement may be amended only by an instrument in writing signed
by both parties.
5.8 Neither party may waive or shall be deemed to have waived any right it
has under this Agreement (including under this section) except to the
extent that such waiver is in writing.
*********
If you are in agreement with the foregoing terms and conditions, kindly
execute below where indicated and return one fully executed copy of this
Agreement to the attention of Rosemary Laurin, Vice President Human Resources,
JetForm Corporation, 560 Rochester Street, Ottawa, Ontario K1S 5K2
Yours very truly,
JETFORM CORPORATION
Per:
------------------------------------
Authorized Officer
Accepted and agreed this ____ day
of ____________, 1998.
- ---------------------------------
Exhibit 10.34
TERMINATION AGREEMENT
Agreement made as of the 19th day of February, 1999, by and between JetForm
Corporation, 560 Rochester Street, Ottawa, Ontario, K1S 5K2 (the ACompany@) and
Philip Weaver, 12 Oakview Road, Kanata, Ontario, K2L 3G2 (AWeaver@).
WHEREAS Weaver has served as a senior executive of the Company since 1994
and Weaver and the Company have agreed to terminate Weaver's employment in the
Company;
AND WHEREAS Weaver and the Company have entered into an agreement dated
August 11, 1994 which Agreement was amended on September 25, 1998 (collectively
the AAgreement@) and wish to set out the parties' respective rights and
obligations under the Agreement as a result of Weaver's agreement to terminate
his employment.
NOW THEREFORE for the reasons set forth above and in consideration of the
mutual premises and covenants contained herein, and other good and valuable
consideration, the receipt and sufficiency of which hereby are acknowledged, it
is hereby agreed as follows:
1. Weaver's employment with the Company shall terminate on the date hereof.
I. Weaver may retain the Company's laptop computer and cell phone, the
telephone number and account for which will be transferred from the Company
to Weaver.
I. Notwithstanding such termination, the Company will pay to Weaver (a) the
aggregate amount of $665,000 over two years, which will be payable in
arrears by direct deposit to Weaver's bank account on the Company's regular
mid-month and end of month pay date commencing with the last pay in
February 1999; (b) $30,000 for outplacement services payable within 30 days
of the date hereof; and (c) $31,971.15 on account of accrued vacation pay
payable within 30 days of the date hereof. In addition, the Company will
continue (i) all health benefits for the earlier of two years or until
Weaver obtains full time employment (Weaver shall notify the Company upon
such event); (ii) a car allowance of $500 per month for a period of two
years; and (iii) stock options granted to and currently vested or unvested
by Weaver as though Weaver had continued to have been employed by the
Company.
II. Notwithstanding Weaver's termination, in the event the Company pays senior
management (i) incentive compensation, whether on account of profit,
customer satisfaction or otherwise, or (ii) benefits allowance whether in
the form of base salary or otherwise, for all or any portion of the one
year period following the date hereof, Weaver shall be entitled to receive
compensation in the same percentages earned of corporate incentive and/or
benefits allowance, same terms and timing as senior management based on an
aggregate corporate incentive to Weaver of $142,500 and, if relevant,
$129,780 based on Company profit and $12,780 on account of customer
satisfaction and based on a benefits allowance to Weaver of $16,620.
Weaver's entitlement hereunder shall be two times the amount determined to
be payable, with the first half payable concurrently with the payment of
incentive compensation and/or benefits allowance to senior management and
the second half payable in 12 monthly instalments immediately thereafter.
III. All amounts stated herein are before taxes. The Company shall withhold and
remit all taxes and statutory withholdings and any other taxes based on
Weaver's income as though Weaver was an employee during the Agreement.
6. Article IV of the Agreement shall continue in full force and effect.
I. Attached hereto as Schedule A are recommendations on strategy, technology,
priorities, personnel, alliance relationships, significant customers and
potential priority customers.
II. The validity, construction and enforceability of this Agreement shall be
governed in all respects by the laws of Ontario and the laws of Canada
applicable therein.
III. Weaver acknowledges and agrees that it will be difficult to compute the
amount of damage or loss to the Company if he violates this Agreement, that
Company will not have an adequate legal remedy if Weaver violates the
provisions of this Agreement and that any such violation will cause
substantial irreparable injury and damage to the Company. Therefore, Weaver
agrees that, in the event of any violation by him of this Agreement, the
Company shall, in addition to damages, be entitled to specific performance,
injunctive, or other equitable relief, of either a preliminary or permanent
type.
IV. Prior to any disclosure by the Company to the public, Weaver agrees to keep
all terms of this Agreement confidential except for any disclosure to
financial advisors.
IN WITNESS WHEREOF, the Company and Weaver have executed this Termination
Agreement as of the date first written above.
JETFORM CORPORATION
By:
-------------------------------------
Title:
----------------------------------
- ---------------------------------- ----------------------------------------
Witness as to the signature of PHILIP WEAVER
Exhibit 10.35
Personal & Confidential - by hand
On a 'Without Prejudice Basis'
SUPERSEDES LETTER DATED MARCH 23, 1999
April 29, 1999
Ian Fraser
Dear Ian,
Further to your conversation with Rosemary Laurin on or about March 01,
1999, this letter will confirm that JetForm Corporation has eliminated your
position as Sr. Vice-President, Sales, effective April 30, 1999.
In accordance with the Employment Agreement which was provided to you dated
September 22, 1998, we will provide you with the following termination package.
Salary Continuance
As stipulated in your Employment Agreement, JetForm will provide salary
continuance in the amount of $246,000 for the period May 01, 1999 to April 30,
2000, which has been based on the following:
Base salary for the period May 01, 1999 to April 30, 2000 in the amount of
$200,000
Commissions paid at 50% of target (current run rate) in the amount of
$15,000
Expense incentive paid at 50% of target (current run rate) in the amount of
10,000
Revenue incentive paid at 25% of target (current run rate) in the amount of
$5,000
Car Allowance in the amount of $6,000 Benefit Menu Allowance in the amount
of $10,000
Benefit Continuance
You will be provided with continuation of your medical, dental and life
insurance benefits until April 30, 2000. It should be noted that you are not
eligible for short or long term disability benefits effective immediately. As
agreed upon, JetForm Corporation will reimburse you for reasonable expenses for
long term disability insurance for the period from May 1, 1999 to April 30,
2000, or until you are re-employed should this occur prior to the end of your
salary and benefit continuance period.
In accordance with Section 3.2 of your Employment Agreement, should you
secure employment prior to April 30, 2000 you will be required to advise JetForm
Corporation of your start date and your medical, dental and life insurance
benefits will then be discontinued.
Vacation Accrual
Your vacation will continue to accrue during the salary and benefit
continuance period. You will receive payment representing your accrued vacation
on the payroll deposit of April 30, 2000.
Outplacement Services
Based on approval of the services provided, JetForm will provide payment up
to $15,000 towards outplacement services, or reasonable expenses.
Expenses
Any outstanding expenses should be submitted as soon as possible. Should
you have outstanding expenses, you will receive a final expense cheque within
two (2) weeks of submission.
JetForm Property
On your last day of work you will be required to immediately return all
JetForm property including keys, passwords, equipment, company materials, etc.
Ian, in recognition of your efforts we will release to you the laptop in your
possession, which is provided "without prejudice".
JetForm Stock Option Plan
As outlined in your Employment Agreement, you will be entitled to exercise
all options which are vested or which vest on or prior to April 30, 2000.. All
unexercised options outstanding 30 days after April 30, 2000 will be canceled.
Confidentiality Agreement
We remind you of the confidentiality agreement that you signed on joining
the company. You are also required to keep confidential the details of this
settlement.
Your Signature is Required
In order to provide you with the termination package as outlined in this
letter, we will require your signature, acknowledging your understanding and
agreement of the terms and a signed release prior to May 3, 1999.
Please sign this copy and fax both this letter and release to Human
Resources at (613) 594-2944. If you should have any questions with respect to
this letter, please contact Donna Morris at 751-5173.
Yours truly,
Keith Sinclair
V.P. Human Resources &
Corporate Services
I agree and accept to the terms of this letter.
Employee: Dated:
--------------------------- ---------------------
<PAGE>
RELEASE AND DISCHARGE
FROM: Ian Fraser
TO: JetForm Corporation
DATE: March 12, 1999
In consideration of the following paid to me:
1. compensation equivalent to payment for fifty-two weeks, equivalent to
$236,000 less statutory deductions.
2. payment of outstanding vacation balance less statutory deductions.
3. payment for outplacement services up to a limit of $15,000.
I hereby release and forever discharge JetForm and its directors, officers,
employees and agents of and from all manner of actions, causes of action, suits,
debts, duties, accounts, contracts, claims and demands whatsoever which I now
have, ever had or hereafter can, shall or may have for or by reason of any
cause, matter or thing whatsoever existing to the present time and arising from
my employment with JetForm or from the termination of such employment,
including, without limiting the generality of the foregoing all claims and
demands for or with respect to salary, remuneration, commission, advances on
commission, fringe benefits, vacation pay, severance allowance, termination pay,
severance pay, notice of termination, deferred profit sharing plan, employee
stock option plan, bonus or any other employment benefit or fringe benefit of
any kind whatsoever. The abovementioned Consideration is inclusive of any and
all obligations which JetForm has or might have in the future pursuant to the
provisions of any legislation or rule of law pertaining to employment standards
or other obligations of JetForm on my termination as an employee. I further
agree not to make any claims (including without limitation any cross-claim,
counter-claim, third party action or application) against any other person
and/or entity which might claim contribution or indemnity against the persons
and/or entities discharged by this release. The abovementioned Consideration is
inclusive of indemnity from the persons and/or entities discharged by this
release.
Ian Fraser
- ------------------------
Signature
Exhibit 10.36
Personal & Confidential - by hand
On a 'Without Prejudice Basis'
SUPERSEDES COPY DATED MAY 26, 1999
June 1, 1999
Carlos Fox
Dear Carlos,
Further to your discussions with John Kelly, this letter will confirm that
JetForm Corporation has terminated your employment as Sr. Vice-President,
Marketing, effective June 30, 1999.
As outlined in your conversations with Debbie Weinstein, in accordance with
the Employment Agreement which was provided to you dated September 22, 1998,
JetForm will provide you with the following termination package.
Salary Continuance
JetForm will provide salary continuance (paid at regular pay periods) in
the amount of $247,000 for the period July 1, 1999 up to and including June 30,
2000, based on the following:
Base salary for the period July 1, 1999 up to and including June 30, 2000
in the amount of $210,000 Quarterly expense incentive paid at 100% of target
(current run rate) in the amount of $20,000 Car Allowance in the total amount of
$6,000 Benefit Menu Allowance in the total amount of $11,000
As agreed upon, salary continuance will not include payment for the Company
Profit Incentive or Customer Satisfaction Incentive.
Benefit Continuance
You will be provided with continuation of your medical, dental and life
insurance benefits until June 30, 2000. It should be noted that you are not
eligible for short or long term disability benefits effective June 30, 1999. As
agreed upon, JetForm Corporation will reimburse you for reasonable expenses for
long term disability insurance for the period from July 1, 1999 to June 30,
2000, or until you are re-employed should this occur prior to the end of your
salary and benefit continuance period.
In accordance with Section 3.2 of your Employment Agreement, should you
secure employment prior to June 30, 2000 you will be required to advise JetForm
Corporation of your start date and your medical, dental and life insurance
benefits will then be discontinued.
Vacation Accrual
Your vacation will continue to accrue during the salary and benefit
continuance period. You will receive payment representing your accrued vacation
on the payroll deposit of June 30, 2000. It should be noted that your current
balance of unused accrued vacation equates to approximately 212.56 hours. As
discussed, you will receive payment of your unused accrued annual vacation on
the payroll deposit of June 30, 1999. The remaining vacation accrual for the
period from July 1, 1999 up to June 30, 200, will be paid on the June 30, 2000
payroll deposit.
Outplacement Services
Based on approval of the services provided, JetForm will provide payment up
to $15,000 towards outplacement services, or reasonable expenses. As agreed
upon, based upon approval by Human Resources, JetForm will agree to the
utilization of all or a portion of this amount for job relocation.
Expenses
Any outstanding expenses should be submitted as soon as possible. Should
you have outstanding expenses, you will receive a final expense cheque within
two (2) weeks of submission.
JetForm Property
On your last day of work you will be required to immediately return all
JetForm property including keys, passwords, equipment, company materials, etc.
JetForm Stock Option Plan
As agreed upon, based on your commitment to provide a minimum of five (5)
hours of consulting services per month for the period from July 1, 2000 up to
December 31, 2000, you will be entitled to exercise all options which are vested
or which vest on or prior to December 31, 2000
Legal Fees
As agreed upon, JetForm Corporation will reimburse, based on invoices,
reasonable legal fees relating to the finalization of this agreement.
Confidentiality Agreement
We remind you of the confidentiality agreement that you signed on joining
the company, and Article IV of the Employment Agreement dated September 22, 1998
as it relates to Non-Competition, Confidentiality and Non-Disclosure. You are
also required to keep confidential the details of this termination agreement.
Your Signature is Required
In order to provide you with the termination package as outlined in this
letter, we will require your signature, acknowledging your understanding and
agreement of the terms and a signed release prior to May 31, 1999.
Please sign this copy and fax both this letter and release to Human
Resources at (613) 594-2944. If you should have any questions with respect to
this letter, please contact Donna Morris at 751-4800, ext. 5173.
Yours truly,
Donna Morris
Director Human Resources
I agree and accept to the terms of this letter.
Carlos Fox: Dated:
------------------------ ------------------
RELEASE AND DISCHARGE
FROM: Carlos Fox
TO: JetForm Corporation
DATE: June 1, 1999
In consideration of the following paid to me:
1. compensation equivalent to salary continuance for a period of (52)
fifty-two weeks, equivalent to $247,000, less statutory deductions.
2. payment of outstanding accrued vacation balance up to June 30, 2000,
less statutory deductions.
3. payment for outplacement services or approved job relocation expenses
up to a limit of $15,000.
I hereby release and forever discharge JetForm and its directors, officers,
employees and agents of and from all manner of actions, causes of action, suits,
debts, duties, accounts, contracts, claims and demands whatsoever which I now
have, ever had or hereafter can, shall or may have for or by reason of any
cause, matter or thing whatsoever existing to the present time and arising from
my employment with JetForm or from the termination of such employment,
including, without limiting the generality of the foregoing all claims and
demands for or with respect to salary, remuneration, commission, advances on
commission, fringe benefits, vacation pay, severance allowance, termination pay,
severance pay, notice of termination, deferred profit sharing plan, employee
stock option plan, bonus or any other employment benefit or fringe benefit of
any kind whatsoever. The abovementioned Consideration is inclusive of any and
all obligations which JetForm has or might have in the future pursuant to the
provisions of any legislation or rule of law pertaining to employment standards
or other obligations of JetForm on my termination as an employee. I further
agree not to make any claims (including without limitation any cross-claim,
counter-claim, third party action or application) against any other person
and/or entity which might claim contribution or indemnity against the persons
and/or entities discharged by this release. The abovementioned Consideration is
inclusive of indemnity from the persons and/or entities discharged by this
release.
Carlos Fox
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Signature
EXHIBIT 23
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
As independent chartered accountants, we hereby consent to the
incorporation by reference in the Registration Statement on Form S-8 of JetForm
Corporation, dated March 30, 1994, of our report dated June 22, 1999 relating to
the consolidated financial statements of JetForm Corporation which is included
in the Annual Report on Form 10-K of JetForm Corporation for the year ended
April 30, 1999.
As independent chartered accountants, we hereby consent to the
incorporation by reference in the Registration Statement on Form S-8 of JetForm
Corporation, dated January 17, 1995, of our report dated June 22, 1999 relating
to the consolidated financial statements of JetForm Corporation which is
included in the Annual Report on Form 10-K of JetForm Corporation for the year
ended April 30, 1999.
As independent chartered accountants, we hereby consent to the
incorporation by reference in the Registration Statement on Form S-3 of JetForm
Corporation, dated June 30, 1995, and as subsequently amended, of our report
dated June 22, 1999 relating to the consolidated financial statements of JetForm
Corporation which is included in the Annual Report on Form 10-K of JetForm
Corporation for the year ended April 30, 1999.
As independent chartered accountants, we hereby consent to the
incorporation by reference in the Registration Statement on Form S-8 of JetForm
Corporation, dated December 11, 1995, for its 1990 Employee Stock Option Plan
and 1993 Employee Stock Option Plan, of our report dated June 22, 1999 relating
to the consolidated financial statements of JetForm Corporation which is
included in the Annual Report on Form 10-K of JetForm Corporation for the year
ended April 30, 1999.
As independent chartered accountants, we hereby consent to the
incorporation by reference in the Registration Statement on Form S-8 of JetForm
Corporation, dated December 11, 1995, for its 1995 Employee Stock Option Plan,
of our report dated June 22, 1999 relating to the consolidated financial
statements of JetForm Corporation which is included in the Annual Report on Form
10-K of JetForm Corporation for the year ended April 30, 1999.
As independent chartered accountants, we hereby consent to the
incorporation by reference in the Registration Statement on Form S-3 of JetForm
Corporation, dated December 20, 1996, of our report dated June 22, 1999 relating
to the consolidated financial statements of JetForm Corporation which is
included in the Annual Report on Form 10-K of JetForm Corporation for the year
ended April 30, 1999.
As independent chartered accountants, we hereby consent to the
incorporation by reference in the Registration Statement on Form S-8 of JetForm
Corporation, dated July 8, 1998, of our report dated June 22, 1999 relating to
the consolidated financial statements of JetForm Corporation which is included
in the Annual Report on Form 10-K of JetForm Corporation for the year ended
April 30, 1999.
PricewaterhouseCoopers refers to the Canadian firm of
PricewaterhouseCoopers LLP and other members of the worldwide
PricewaterhouseCoopers organization.
Chartered Accountants
Ottawa, Ontario
July 24, 1999
PricewaterhouseCoopers LLP
Chartered Accountants
99 Bank Street
Suite 800
Ottawa Ontario
Canada K1P 1E4
Telephone +1 (613) 237 3702
